TCS, Wipro, Infosys Share Price Target Reduced By Jefferies — What's Weighing On Stocks? Details Inside

TCS, Infosys and Wipro's share price targets were reduced by Jefferies, as the research firm believes that AI may drive 20% revenue deflation in IT services over CY25-30, said Jefferies on Friday. The brokerage said that the revenue-deflation's impact in IT services will be higher on high-margin revenue streams. "This is likely to keep the growth of our coverage limited to 3.8% CAGR and keep margins in check."

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The brokerage noted that AI is likely to limit growth in the IT services market to 1.5%-3% CAGR over 2024-29 due to three key reasons.

Clients may delay IT spending on concerns of rapid AI advancements rendering current investments obsolete.

AI-led productivity gains may impact existing IT services revenues by 20% over FY25-30, while growth opportunities arising from AI may be back-ended.

Clients have not fully realised ROIs on elevated incremental tech.

The brokerage further noted that, between 2021 and 2024, average annual spending reached $280 billion, a significant increase from the $130 billion recorded over the 2016-2020 period.

"We anticipate our coverage to grow at a compound annual growth rate of 3.8% from FY25 to FY28, driven by market share gains. Among the firms, Infosys and HCL Technologies face the lowest risk of revenue deflation due to AI adoption, while mid-sized companies are exposed to higher risks," it said.