Kyndryl Holdings, Inc. (NYSE:KD) experienced a significant decline in its stock value following the release of its weak bookings report for the third quarter of 2025. As of December 24, 2025, Kyndryl shares closed at $27.28, reflecting a 22.03% decrease over the past 52 weeks. The company’s market capitalization stood at $6.306 billion.
In its third-quarter 2025 investor letter, Loomis Sayles, an investment management firm, noted that U.S. equities generally performed well during this period. Factors such as easing tariff concerns and a pro-growth budget passed by the U.S. Congress contributed to market optimism. The Loomis Sayles Small Cap Value Fund achieved a return of 6.21%, although this was lower than the 12.60% return of the Russell 2000 Value Index.
Performance Insights and Market Context
Loomis Sayles highlighted Kyndryl Holdings as a notable stock in its analysis. The company, which provides technology services and IT infrastructure, reported a one-month return of 7.23%. Despite this short-term recovery, the overall performance was marred by concerns over weak bookings in its consulting division, which has raised alarms about future sales growth.
Loomis Sayles stated, “The market leadership change toward ‘risk-on’ and ‘low-quality’ stocks is common around market pivot points and has continued into the third quarter of the year.” The firm emphasized that its stock selection strategy underperformed compared to the index, primarily due to a style mismatch with their high-quality approach. Kyndryl, along with Haemonetics Corporation and Alight, Inc., were identified as significant detractors from fund performance during this quarter.
Kyndryl, which was spun off from IBM in 2021, has been working to improve its gross margins, which were initially low due to legacy contracts inherited from IBM. The company has focused on establishing new growth opportunities and re-pricing long-term service contracts to enhance contract terms and expand service offerings. Despite these efforts, the recent bookings report has led to a more cautious outlook from Loomis Sayles regarding Kyndryl’s performance in upcoming quarters.
Investment Sentiment and Hedge Fund Activity
Kyndryl Holdings is no longer among the top 30 most popular stocks among hedge funds. At the end of the third quarter, 24 hedge fund portfolios included Kyndryl, down from 36 in the previous quarter. This shift reflects growing concerns about the company’s ability to maintain momentum in a competitive market.
In the second quarter of fiscal 2026, Kyndryl reported revenues of $3.7 billion, marking a 1% decrease from the same period last year. When adjusted for constant currency, the decline was 3.7%. While these figures underscore the challenges faced by Kyndryl, Loomis Sayles remains optimistic about the potential of artificial intelligence (AI) stocks. They noted that some AI companies present greater opportunities for higher returns within a shorter time frame compared to Kyndryl.
As investors navigate the complexities of the tech sector, the performance of Kyndryl Holdings will continue to draw attention. The company’s ability to adapt and leverage new growth strategies will be crucial for its future success. For those interested in exploring emerging opportunities, Loomis Sayles suggests examining affordable AI stocks that may offer promising returns.
In conclusion, while Kyndryl Holdings has made strides since its separation from IBM, recent performance indicators have raised questions about its trajectory. Investors are advised to keep a close eye on upcoming quarterly reports as the company seeks to regain momentum in a challenging market landscape.
