Infosys is experiencing a surge in its stock value, driven by the company's increased focus on Artificial Intelligence (AI) and an improved financial outlook for fiscal year 2026. Shares of India's second-largest software services exporter saw significant gains after the company unexpectedly raised its revenue forecast for FY26.
The Bengaluru-based IT giant has revised its revenue growth guidance for FY26 to 3.0%-3.5% in constant currency, a notable increase from the previous projection of 2.0%-3.0%. This upward revision reflects increasing confidence in future business opportunities and client spending, positively impacting investor sentiment for the Indian IT sector.
Several factors contributed to this positive shift, with AI playing a central role. Infosys is strategically focusing on AI to drive business growth, deepening relationships with its largest global customers and expanding strategic partnerships with AI companies, including Cognition, the developer of the Devin software agent. Infosys will combine Cognition's Devin software agent with its knowledge of the client landscape and industry expertise. The company is already working with Cognition across clients.
Infosys is actively involved in numerous AI projects. The company is currently working on 4,600 AI projects and has generated over 28 million lines of code using AI. Moreover, they have built over 500 AI agents. Infosys has also enhanced its Topaz AI capability with an agent services suite called Topaz Fabric, designed to help clients manage and implement AI agents across the enterprise. CEO Salil Parekh noted the strong momentum in AI adoption across their client base, with 90% of Infosys' 200 largest clients currently working with the company to unlock value with AI.
Besides AI, Infosys secured large deals worth $4.8 billion, with 57% being net new, including a significant $1.6 billion deal with the National Health Service in the UK. This influx of new business significantly contributed to the raised revenue growth guidance.
For its third fiscal quarter 2025, which ended December 31, Infosys reported revenue of $5.10 billion, up 1.7% over its third fiscal quarter 2024 revenue of $4.94 billion. This exceeded revenue expectations by $70 million, according to Seeking Alpha. The company's net profit, however, experienced a dip, falling to $747 million, or 18 cents per share, from last year's $804 million, or 19 cents per share. On a non-GAAP basis, net profit was $855 million, or 21 cents per share, up from last year’s $804 million, or 19 cents per share. Non-GAAP earnings beat analyst expectations by 1 cent per share, according to Seeking Alpha.
The company maintained its operating margin guidance for the financial year at 20% to 22%.
Infosys's positive performance has also been recognized by analysts. Ahead of the third-quarter earnings disclosure, approximately 51 analysts scrutinized Infosys, with a consensus leaning positive. Specifically, 37 analysts recommended a 'Buy' rating, 11 suggested 'Hold,' and only three advised a 'Sell' on the stock.
The company is making an explicit bet on future demand, particularly in digital and AI services, by stepping up talent investments. Infosys has already onboarded about 18,000 freshers and is on track toward a 20,000 campus-hire target for the year.
The market has reacted positively to Infosys's improved outlook, with the company's American Depositary Receipts (ADRs) surging. The ADRs closed 10.45% higher, as investors welcomed management's decision to upgrade full-year growth guidance.
