Shares of Tata Consultancy Services (TCS) climbed more than 3% in early trade on Friday after the IT major’s June quarter results and management commentary strengthened expectations of a gradual recovery in technology spending.
The stock gained as much as 3.45% to Rs 2,120.30, emerging as the top gainer on the Nifty 50 index.
Investors reacted positively to signs of improving demand conditions and continued momentum in artificial intelligence-led projects.
TCS reported revenue of Rs 72,275 crore for the June quarter, slightly ahead of market expectations.
However, net profit stood at Rs 13,349 crore, marginally below analyst estimates.
The company also highlighted strong progress in its artificial intelligence business, with annualised AI revenue reaching $2.6 billion.
The IT services major reported deal wins worth $9.5 billion during the quarter, reflecting continued demand for digital transformation and AI-based solutions among enterprise clients.
Brokerages largely viewed the quarterly performance as broadly in line with expectations.
Analysts said investors were encouraged by improving demand commentary, sustained deal momentum and the increasing contribution of AI-related projects.
A key focus area for investors remains whether TCS can convert its growing AI pipeline into stronger revenue growth in the coming quarters.
While the company has witnessed rapid expansion in AI offerings, analysts are monitoring the pace at which these projects translate into commercial growth.
Brokerages noted that TCS’ AI business is scaling steadily and supporting a healthy order pipeline.
They also highlighted opportunities in sectors such as manufacturing and life sciences, along with the company’s strong deal wins, as positive factors supporting the long-term outlook.
However, analysts cautioned that several challenges remain. Wage hikes, higher investments in artificial intelligence infrastructure and continued pricing pressure could impact margins in the near term.
Geopolitical uncertainties and possible AI-driven pricing deflation may also limit growth momentum.
Despite these concerns, most brokerages maintained a positive or constructive view on the stock, citing the company’s strong fundamentals, improving demand environment and expanding AI capabilities.
Market participants will now closely track whether the expected recovery in technology spending gains pace and whether TCS can demonstrate stronger revenue growth through AI monetisation and large deal execution in the upcoming quarters.
