Is CGI Inc. (GIB) the Most Oversold Large Cap Stock to Invest in Now?
Wall Street is being impacted by the uncertainty surrounding the tariff news. The broader has dropped a lot since Trump took office on January 20, and investors are mostly worried about tariffs because they think they could hurt economic growth and cause inflation. Investors think trade policies can reduce consumer confidence and restrict businesses' ability to invest capital, while Trump believes tariffs can boost national revenue, promote broad-based growth, and be used as a negotiation weapon with other nations.
According to Franklin Templeton, the Magnificent Seven's supremacy in AI has allowed US stocks to generate significant returns over the last few years, with the broader market frequently hitting all-time highs. The outlook for the market as a whole is favorable, notwithstanding high valuations. Sales growth has been accelerating, innovation and investment are still happening at a rapid pace, and this year's earnings are predicted to increase by double digits. Additionally, the administration of the US economy is more business-friendly. However, there are concerns, primarily associated with US trade policy and the anticipated effects of tariffs on important industries, such as technology.
Franklin Templeton thinks that despite these risks, investor confidence in US stocks should continue to be high. The new administration's policy reforms are anticipated to finally produce long-term benefits for the larger US economy, notwithstanding the possibility of increased dangers.
Franklin Templeton also stated that although the Mag 7 stocks are positioned for long-term success, market leadership is anticipated to expand as and when innovation accelerates. According to the investment firm, active management is crucial. The transition from AI platforms to infrastructure is still in progress. Consequently, it is anticipated that the success of investments will depend on the ability to select the appropriate companies at the right time—those that have the technology, strategy, and flexibility to continue and sustain long-term growth.
Thanks to innovation and investment, US stocks—mostly large-cap stocks—have been doing well. Notably, the Dow index has increased by more than 4.5% in the last six months. The investment business sees expanding chances beyond such market leaders, even though the Mag 7 stocks still sustain the market momentum. The competitive landscape is still dynamic and has been generating new development sectors as a result of the ongoing AI-driven cycle.
For our methodology, we screened for stocks with a market capitalization exceeding $10 billion and a relative strength index (RSI) below 40. We then ranked these stocks based on the lowest RSI as of March 23, 2025. An RSI below 40 suggests that the stock is oversold.
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Relative Strength Index: 28.77
CGI Inc. (NYSE:GIB) is a global IT and business consulting firm based in Montreal, Canada, helping organizations improve efficiency through IT solutions. It offers consulting, systems integration, and managed IT services, working with clients across industries like government, banking, healthcare, and manufacturing.
CGI Inc. (NYSE:GIB) delivered strong first-quarter results for the fiscal year 2025 and showed steady growth and operational efficiency. Its revenue rose 5.1% year-over-year to C$3.8 billion, with notable growth in the U.S. Federal sector (14%), Canada (5.9%), and the Asia-Pacific region (5.2%). Its bookings reached C$4.2 billion, resulting in a solid book-to-bill ratio of 110%, which reflected strong demand for CGI's services.
The company's profitability also improved, with earnings before income taxes reaching C$592 million, a margin of 15.6%, up 100 basis points from last year. The adjusted EBIT margin stood at 16.2%, while diluted EPS climbed 15% to C$1.92. The company generated C$646 million in cash from operations, representing 17.1% of total revenue, and approved a quarterly dividend of C$0.15 per share. Notably, CGI Inc. (NYSE:GIB) was among the most oversold stocks recently, reflecting market fluctuations despite its strong financial performance.
CGI Inc. (NYSE:GIB)'s growth was fueled by strong performance in North America, particularly in government and financial services. Cost optimization efforts contributed to higher profitability, while the company's long-term strategy of strategic acquisitions and high-value services continued to drive success.
CGI Inc. (NYSE:GIB) also acquired BJSS recently, a major IT and software engineering consultancy in the U.K., expanding its capabilities in key commercial industries, which further strengthened its position. The company has also earned endorsements from analysts recognizing its expertise in AI, data modernization, cloud, and cybersecurity, reinforcing its reputation as a leader in the IT services industry.
Overall, GIB ranks 11th on our list of most oversold large cap stocks to invest in now. While we acknowledge the potential of GIB, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GIB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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