Infosys shares fall in US trade as tech firm lowers annual sales growth forecast

Infosys shares fell in US trade after the technology firm lowered its annual revenue growth forecast, raising concerns about weak demand for major technology projects and rising artificial intelligence competition. The American Depositary Receipts of Infosys fell to $12.25 in pre-market trading on Friday, October 23, after the Bengaluru-based company trimmed its fiscal year guidance ending March 2027 to 1% to 2%, down from its earlier estimate of 1.5% to 3%. Most analysts had expected the company to lower the upper end of its guidance to 2.5%.

Earnings And AI

Infosys reported a 6.2% year-on-year increase in consolidated net profit to ₹7,823 crore for the September quarter, up from ₹7,364 crore in the same period last year. Consolidated revenue from operations rose 10.2% year-on-year to ₹49,244 crore. AI-related revenue accounted for 10.5% of the total revenue and grew 29% from the previous quarter. CEO and Managing Director Salil Parekh said the company secured large deals worth $5.2 billion during the quarter, including a mega deal valued at more than $2 billion.

Market Pressures

India's second-largest IT services company has faced a demand slowdown driven by global uncertainty, the Middle East conflict, and competition from artificial intelligence firms like Anthropic and OpenAI that automate labor-intensive tasks. TCS reported a gradual improvement in contract flow earlier in the month with annualised AI revenue reaching $3.1 billion, while Infosys Chairman Nandan Nilekani stated last week that artificial intelligence will galvanize small businesses rather than eliminate jobs.

Context

Major technology services firms often adjust their annual revenue forecasts based on current client spending trends and large contract wins. Shifts in corporate technology budgets and new automation tools continue to shape the outlook for the Indian IT sector.