After HCL Technologies, Infosys also let down the Street with weaker-than-anticipated FY27 revenue growth guidance, reinforcing concerns about a slowing IT cycle.
The stock fell over 5% on Friday, sliding to a new 52-week low of ₹1,167.80. Revenue guidance from large IT firms tends to set the tone for investor expectations for the sector.
Geo-political conflicts and AI-led deflation are likely dampeners to growth in FY27, reflected in Infosys’s underwhelming revenue guidance of 1.5%-3.5% CC (1.25–3.25% in organic CC). CC is constant currency.
The guidance factors in a 75-100 basis points (bps) impact from a planned ramp-down with a European client (Daimler) and a change in onsite mix. While it includes the impact of the Stratus acquisition, the Optimum Healthcare deal and Versent joint venture are excluded.
Infosys’s guidance suggests AI is beginning to compress the existing book of business.
“While part of this is attributable to competitive intensity and pricing in a low-demand environment, we expect the impact of deflation to continue as AI productivity benefits are passed on to clients,” said Motilal Oswal Financial Services in a report dated 23 April.
Motilal expects Infosys to grow at the mid-point of FY27 guidance (about 2.5% organic), marking a deceleration versus FY26 CC revenue growth of 3.1%.
Weak quarter
Sequential CC revenue fell 1.3% in the March quarter (Q4FY26), against consensus estimates of a 0.6% drop, hurt by seasonality and delays in client decision-making, particularly in March.
Segment-wise, weakness was led by manufacturing, financial services and retail.
Infosys expects H1FY27 to be stronger than H2, factoring in normal seasonality, with BFSI and Europe likely to see an acceleration in revenue growth aided by healthy deal wins.
Large deal wins in Q4 stood at $3.2 billion, down 33% sequentially, comprising 19 deals with a net-new component of around 40%.
For FY26, large deal total contract value rose around 24% year-on-year to $14.9 billion, with a net-new mix of around 55%, taking the total number of large deals to 96 for the year.
Yet, robust deal wins are not translating into sharp revenue growth—a problem many IT companies have faced lately amid persistent client caution.
Spend caution
Infosys said discretionary IT spend remains constrained across most verticals. However, non-discretionary spending is increasingly AI-led, with clients seeking productivity savings.
Infosys expects to see deflation in existing services.
Infosys’s FY27 guidance reiterates the seriousness of AI-led deflation and this could just be the beginning of what’s to come, cautioned Nirmal Bang Institutional Securities.
HCL, too, had called out that its service line is less exposed to GenAI deflation, with around 2–3% drag on its revenues. It estimates a higher drag of 3–5% for the industry over four–five years, implying 15–20% of revenues at risk.
HCL’s FY27 CC revenue guidance of 1–4% and Wipro’s Q1FY27 sequential CC guidance of -2-0% also upset the Street. Tata Consultancy Services does not provide guidance.
Margin watch
Infosys’ margins remained stable at around 21% in FY26, with benefits from currency and Project Maximus being reinvested into AI capabilities and talent.
Its FY27 margin guidance of 20–22% factors in headwinds from wage hikes, AI productivity pass-through, and acquisition impact, partly offset by efficiency initiatives.
Infosys stock has plummeted 28% so far in 2026, dragging the Nifty IT index down 24%.
JM Financial Institutional Securities noted that the read-through from the top six Indian IT results so far is that industry growth in FY27 is likely to be lower than expectations at the start of the quarter.
Heightened competition and AI deflation impact are visible across companies, in addition to macro uncertainty, it said in a 23 April report.