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Pure-play engineering research and development (ER&D) firms lagged behind their information technology (IT) services peers in calendar year (CY) 2024, hit by US election-related uncertainty, weak demand across sectors, and delays in client decision-making. That underperformance may extend, with a soft January-March quarter likely and modest projections for CY 2025. ER&D stocks have already dropped over 20 per cent on average since early February.
Girish Pai of BOB Capital Markets says deceleration and no-growth risks are rising, and the Street hasn’t fully priced in the earnings downside. Tariff hikes — including retaliatory ones — and fiscal tightening in the US
