Neha Gupta
2 min read
We have just published our list of the 10 Activist Target Stocks with High Cash and Low Valuations, with EPAM Systems ranked 10th on the list.
EPAM Systems (NYSE:EPAM) has attracted activist investor attention amid its strong cash position, cash flow generation, and low valuation. In August, Engine Capital disclosed a 1.5% stake in the company and called for aggressive measures to unlock shareholder value.
The activist campaign comes as EPAM shares have significantly underperformed the broader market, falling 29% year to date, compared with a 24.9% gain for the Insider Monkey Billionaire Index. See Why is EPAM exploring cybersecurity opportunities?
Engine Capital insists the company is in a solid financial position to finance stock buybacks using its existing cash reserves and future cash flow. It has also urged management to consider a formal strategic review that could entail a potential sale to a strategic buyer or private equity firm.
Photo by AlphaTradeZone on Pexels
EPAM Systems’s balance sheet supports Engine Capital’s proposed capital return strategy. At the end of the second quarter of 2026, the company reported $794.3 million in cash and cash equivalents, down from $1.3 billion at the end of 2025.
The market heavily penalized EPAM over fears that Generative AI would cannibalize traditional offshore coding and IT consulting services. Engine’s thesis views AI as an incremental growth driver rather than a structural threat, with EPAM successfully shifting to AI-native architecture.
Meanwhile, the stock’s significant decline has left it trading at a considerable discount to industry peers. It currently trades at approximately a 10.5x forward price-to-earnings multiple, compared with the sector median of 21.3x. Its price-to-sales multiple of 1.3x is also below the sector median of 3.2x.
EPAM Systems could be an interesting undervalued technology stock, particularly given its relatively low sales multiple, cash position, and potential for earnings recovery.
While we acknowledge the risk and potential of EPAM as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than EPAM that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.
READ NEXT: 10 Best Performing AI Stocks of 2026 and 10 Best Biotech Stocks Under $10 to Buy
Disclosure: None. Follow Insider Monkey on Google News.
