AI-assisted research analysis by FutureKnowledge. Sources checked 26 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Infosys shares fell on Monday after the IT services company cut its FY27 revenue growth guidance to 1–2% in constant currency from 1.5–3%, even as its Q2 results showed $5.2 billion of large deal wins and AI revenue up 29% from the previous quarter, according to the company’s results release.
Infosys Q2 results: the key numbers
For the quarter ended 30 September 2026, reported on 23 October, Infosys said:
- Revenue: $5,145 million, up 1.5% year on year in constant currency and 1.3% in reported dollar terms; up 1.2% sequentially in constant currency.
- Operating margin: 21.0%, stable.
- Large deal TCV: $5.2 billion, 62% of it net new, including a mega deal worth over $2 billion.
- Free cash flow: $928 million, down 15.7% year on year but equal to 113.3% of net profit.
- AI: 10.5% of revenue, with AI revenue up 29% quarter on quarter.
- Dividend: interim dividend of ₹26 per share, up 13% from a year earlier.
In rupee terms, net profit was ₹7,828 crore, up 6.2% year on year, against a Bloomberg poll estimate of ₹7,904 crore, while revenue of ₹49,244 crore rose 10.7% and slightly beat estimates, Business Standard reported. In dollars, revenue missed the consensus of $5.19 billion and earnings per American depositary share of 20 cents were a cent below forecasts, according to Benzinga and Zacks via Yahoo Finance.
Why Infosys cut its FY27 guidance
The guidance cut was the main disappointment. The new 1–2% range compares with 1.5–3% earlier; most analysts had expected Infosys to trim only the top end, to 2.5%, Investing.com reported. Organic growth guidance was cut to between -0.5% and 0.5% from between -0.2% and 1.3%, according to Business Standard. The operating margin band of 20–22% was kept.
Chief financial officer Jayesh Sanghrajka pointed to cautious client spending amid geopolitical uncertainty, high energy costs and inflation, slower project volumes, pricing pressure, and clients asking for productivity gains, Benzinga reported. Retail and high-tech clients stayed weak, while financial services, energy and utilities, and manufacturing held up better.
AI cuts both ways
Chief executive Salil Parekh highlighted demand for AI agents, legacy modernisation and data services, and the company’s Topaz Fabric platform. But the same technology is shrinking revenue from existing work: when AI makes delivery faster, clients expect to pay less. Motilal Oswal said competitive intensity had blocked expected price increases and called AI-led productivity deflation a near-term headwind on existing contracts, per Business Standard. That is the tension behind a sector-wide sell-off. Infosys shares are down about 31% this year.
How Infosys shares moved
Infosys fell 3.07% in early trade and was among the biggest Sensex losers, India TV reported, while the Sensex opened 133.79 points lower at 72,990.04. The stock dropped as much as 3.88% to ₹1,109.70 on BSE against a previous close of ₹1,154.50, according to Business Standard. Investing.com later reported it trading 1.5% lower at ₹1,135.70, which suggests part of the early drop was recovered. In New York, the ADR fell 4.43% to $12.63 on Friday, according to Benzinga, and Zacks put the Friday decline at 6.6%; the gap reflects different measurement times.
Brokerages stayed split. Motilal Oswal and Emkay Global cut earnings estimates by roughly 1–2% but kept positive ratings on valuation grounds, while Antique Stock Broking saw the deal pipeline as the main positive, Business Standard reported. FutureKnowledge does not reproduce price targets.
What it means for India’s IT sector
Infosys is India’s second-largest IT services exporter, and its guidance is read as a signal for the sector. The quarter shows a split picture: deal signings are strong, with a seven-year, net-new mega deal of over $2 billion from a financial services client expected to add more than 1% to FY28 growth once it ramps up from late Q4, according to Business Standard. But near-term revenue is soft as AI compresses existing contracts and discretionary spending stays weak.
That contrasts with mid-tier engineering firms such as L&T Technology Services, whose shares jumped on AI deals earlier this month, suggesting the market is rewarding companies that look like AI beneficiaries and penalising those where AI cannibalises legacy work. Elevated oil prices, which FutureKnowledge has tracked in its coverage of the Brent rally, add to client caution in energy-sensitive sectors.
Who is more or less exposed
In general terms, IT firms with heavy exposure to retail and hi-tech clients and to traditional application maintenance face the most pricing pressure. Those with large financial services books, strong AI services and engineering work look more resilient. Employees may see slower hiring as companies prioritise margins; Infosys says it remains selective on new contracts. The rupee’s level also matters: a weaker rupee lifts rupee revenue, which is partly why rupee growth (10.7%) looks far better than dollar growth (1.3%).
Scenarios to watch
These are conditional scenarios, not predictions.
| If… | Then the likely implication is… |
|---|---|
| The $2 billion mega deal ramps up on time from late Q4 | FY28 growth gets a visible lift of more than 1%. |
| AI productivity cuts deepen on renewals | Revenue from existing clients keeps shrinking even as deal TCV grows. |
| US and European discretionary spending recovers | Guidance could stabilise at the upper end of 1–2%. |
| Wage hikes and acquisition costs hit H2 margins | Margins could drift towards the lower half of 20–22%. |
What to watch next
- Comments from peers on AI-led pricing deflation and FY27 demand.
- Sequential revenue in Q3, which Motilal Oswal expects to decline seasonally.
- Whether AI revenue keeps growing faster than legacy revenue shrinks.
- Rupee movements against the dollar.
Bottom line
Infosys’ Q2 results show a company winning big deals and growing AI revenue quickly, yet trimming its full-year outlook because AI and weak client budgets are eroding existing work. The guidance cut to 1–2% matters more to investors in the near term than the $5.2 billion in deal wins, which will take time to turn into revenue.
Method note: this analysis compared Infosys’ official results release with reporting from Business Standard, Benzinga, Investing.com, India TV and Zacks (via Yahoo Finance). Rupee profit figures are from Business Standard; intraday share moves differ by source and time and are attributed individually.