How investors will react to OpenText (OTEX) highlighting corporate gaps in AI risk and governance

• Earlier this month, OpenText, in collaboration with the Ponemon Institute, released a global report on managing risk and optimizing the value of AI, generative, and agent AI, highlighting that many companies are deploying these tools without fully developed security and governance frameworks.
• This finding that only a minority of companies have fully integrated AI into their cybersecurity and risk assessments highlights the growing gap between AI adoption and risk management that can impact how organizations prioritize trusted AI platforms and services.
• Here, we explore how this new AI risk and governance research could impact OpenText’s investment story, specifically its AI-driven cloud strategy.

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Open Text Investment Story Summary

To own OpenText, you must believe that the move to secure, AI-powered cloud and information management can offset the pressures of traditional, low-maintenance, low-performance cybersecurity departments. The new Ponemon AI Risk Study aligns well with that theory, but does not meaningfully change the near-term catalyst that is the execution of AI-driven cloud growth, or the key risk that a decline in cloud traction could expose overall revenue and profits.

Among recent developments, the expansion of the US$500 million share buyback authorization stands out in this context. This ranks alongside OpenText’s AI-first messaging, such as Aviator and Titanium X, which shows continued return on capital even as management invests in cloud and AI capabilities. For investors, the combination of aggressive share buybacks and a focus on trusted AI platforms could determine how new risk and governance studies are interpreted against existing growth expectations.

But behind OpenText’s AI push, investors should be aware that continued declines in legacy maintenance revenue may still be in the cards.

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Open Text’s story projects $5.4 billion in revenue and $862.6 million in revenue by 2028.

We reveal how Open Text’s predictions create a fair value of $40.00, an 86% increase over the current price.

explore other perspectives

While the consensus focuses on gradual advances in cloud and AI, the most optimistic analysts see revenue reaching approximately USD 888.2 million by 2028, highlighting that this view could change significantly once OpenText’s new AI risk discoveries and increased regulatory oversight are fully reflected in the latest forecasts, and how they consider both the upside and downside when formulating their views may differ.

Check out 4 other fair value estimates on Open Text – See why the stock is worth just $33.09!

The verdict is yours

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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