Two years ago, few investors would have believed that IT stocks would deliver almost zero returns by now.

These stocks have declined swiftly over the past few months, but this has less to do with the individual companies themselves than with structural changes in the industry. Over the past two years, Wipro stock has returned just 3.5% compounded annually, even accounting for the 1:1 bonus in December 2024.

Today, we will evaluate the company’s prospects over the next three years. Note this is not a recommendation on the stock in any form.

Before we delve into the details, let’s find out a little about Wipro.

IT stalwart

Wipro is a leading technology services and consulting company focused on building innovative solutions that address clients’ most complex digital transformation needs. It helps clients realize their ambitions to build intelligent and sustainable businesses through its consulting-led approach and the Wipro Intelligence suite of AI-powered platforms, solutions and transformative offerings. With more than 240,000 employees and business partners in 65 countries, it is among India's top IT firms.

Why has Wipro stock delivered poor returns of late?

Slower revenue growth than peers: Wipro has consistently lagged its larger rivals in revenue growth. Sales growth was -0.8% in FY24 , -0.8% in FY25, and 4% in FY26. Compound annual growth in revenue has been virtually flat over the past three years. Net profits have mirrored this trend, having been flat over the past two years.

The rise of AI: AI has also become a big concern for Wipro and the broader IT services industry, as these tools are increasingly able to automate many mundane coding, testing, maintenance and support tasks. This has raised fears that lower-end IT outsourcing work may shrink over time, putting pressure on these companies’ employee-based revenue model.

Historically, Indian IT companies have grown hiring more engineers. But AI is increasing productivity, so clients may need fewer billable employees to do the same work, which could affect revenue growth and margins of companies such as Wipro.

Mutual fund selling pressure: As fears about structural changes in the industry abound, mutual funds have sold large-cap IT stocks, including Wipro, creating continuous pressure on their share prices. Mutual Funds have reduced their Wipro holdings from 4.86% in December 2025 to 4.31% in March 2026.

Global economic uncertainty: High inflation, elevated interest rates, and recession fears in the US and Europe have made companies cautious about technology spending. The West Asia conflict has also added to uncertainty. Clients are postponing non-essential digital transformation, consulting, modernisation, and innovation plans to conserve cash.

Will Wipro stock deliver decent returns in the next three years?

A meaningful stock recovery hinges on several key factors, including:

FII inflows into IT stocks: Large IT companies stand to benefit if foreign investors return to buy their stocks. At the moment, though, foreign institutional investors (FIIs) are selling Indian stocks.

Global IT spending recovery: If tech budgets in the US and Europe bounce back, we could see IT stocks recover.

Better revenue growth than peers: Wipro will have to consistently deliver better quarterly growth and close the gap with peers.

AI monetisation: Investors will expect to see substantial revenue from AI services, automation, data engineering and enterprise AI integration projects. Faster revenue growth and higher margins from large contract wins could help restore investor confidence.

Margin expansion: Operating margins expansion through increased employee utilisation, lower attrition and automation/cost control, could also be an important trigger for the stock.

Wipro stock trades at much lower price-to-earnings and price-to-book ratios than peers such as HCL Tech and Tech Mahindra. However, its PE ratio is higher than that of TCS and almost the same as Infosys.

Conclusion

It’s difficult to predict where technology will go, especially in a fast-changing world driven by artificial intelligence, cloud computing and automation. The pace of innovation is accelerating, but the pace of adoption often varies by industry and region.

Enterprises may adopt new technologies faster and slower than expected, or in entirely different ways than traditional service providers anticipate. This creates uncertainty, not only about demand but also about what types of services will be relevant in the future.

Swift changes in technology or business models could change the competitive landscape overnight in favour of newer and nimbler entrants. Long-term growth paths have become more difficult to forecast and results are less predictable than in the days of relatively stable, linear growth.

Investors should evaluate a company's fundamentals, corporate governance, and stock valuations before making an investment decision.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

Two years ago, few investors would have believed that IT stocks would deliver almost zero returns by now.

These stocks have declined swiftly over the past few months, but this has less to do with the individual companies themselves than with structural changes in the industry. Over the past two years, Wipro stock has returned just 3.5% compounded annually, even accounting for the 1:1 bonus in December 2024.

Today, we will evaluate the company’s prospects over the next three years. Note this is not a recommendation on the stock in any form.

Before we delve into the details, let’s find out a little about Wipro.

IT stalwart

Wipro is a leading technology services and consulting company focused on building innovative solutions that address clients’ most complex digital transformation needs. It helps clients realize their ambitions to build intelligent and sustainable businesses through its consulting-led approach and the Wipro Intelligence suite of AI-powered platforms, solutions and transformative offerings. With more than 240,000 employees and business partners in 65 countries, it is among India's top IT firms.

Why has Wipro stock delivered poor returns of late?

Slower revenue growth than peers: Wipro has consistently lagged its larger rivals in revenue growth. Sales growth was -0.8% in FY24 , -0.8% in FY25, and 4% in FY26. Compound annual growth in revenue has been virtually flat over the past three years. Net profits have mirrored this trend, having been flat over the past two years.

The rise of AI: AI has also become a big concern for Wipro and the broader IT services industry, as these tools are increasingly able to automate many mundane coding, testing, maintenance and support tasks. This has raised fears that lower-end IT outsourcing work may shrink over time, putting pressure on these companies’ employee-based revenue model.

Historically, Indian IT companies have grown hiring more engineers. But AI is increasing productivity, so clients may need fewer billable employees to do the same work, which could affect revenue growth and margins of companies such as Wipro.

Mutual fund selling pressure: As fears about structural changes in the industry abound, mutual funds have sold large-cap IT stocks, including Wipro, creating continuous pressure on their share prices. Mutual Funds have reduced their Wipro holdings from 4.86% in December 2025 to 4.31% in March 2026.

Global economic uncertainty: High inflation, elevated interest rates, and recession fears in the US and Europe have made companies cautious about technology spending. The West Asia conflict has also added to uncertainty. Clients are postponing non-essential digital transformation, consulting, modernisation, and innovation plans to conserve cash.

Will Wipro stock deliver decent returns in the next three years?

A meaningful stock recovery hinges on several key factors, including:

FII inflows into IT stocks: Large IT companies stand to benefit if foreign investors return to buy their stocks. At the moment, though, foreign institutional investors (FIIs) are selling Indian stocks.

Global IT spending recovery: If tech budgets in the US and Europe bounce back, we could see IT stocks recover.

Better revenue growth than peers: Wipro will have to consistently deliver better quarterly growth and close the gap with peers.

AI monetisation: Investors will expect to see substantial revenue from AI services, automation, data engineering and enterprise AI integration projects. Faster revenue growth and higher margins from large contract wins could help restore investor confidence.

Margin expansion: Operating margins expansion through increased employee utilisation, lower attrition and automation/cost control, could also be an important trigger for the stock.

Wipro stock trades at much lower price-to-earnings and price-to-book ratios than peers such as HCL Tech and Tech Mahindra. However, its PE ratio is higher than that of TCS and almost the same as Infosys.

Conclusion

It’s difficult to predict where technology will go, especially in a fast-changing world driven by artificial intelligence, cloud computing and automation. The pace of innovation is accelerating, but the pace of adoption often varies by industry and region.

Enterprises may adopt new technologies faster and slower than expected, or in entirely different ways than traditional service providers anticipate. This creates uncertainty, not only about demand but also about what types of services will be relevant in the future.

Swift changes in technology or business models could change the competitive landscape overnight in favour of newer and nimbler entrants. Long-term growth paths have become more difficult to forecast and results are less predictable than in the days of relatively stable, linear growth.

Investors should evaluate a company's fundamentals, corporate governance, and stock valuations before making an investment decision.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com