JPMorgan has maintained a Neutral rating on Infosys with a Rs 1,050 price target, saying the company's near-term demand environment remains broadly unchanged while the benefits of AI-led growth acceleration are still some way off. The brokerage's latest assessment follows a virtual fireside chat with Infosys CFO Jayesh Sanghrajka and investor-relations executives.
JPMorgan said demand has remained largely unchanged since the first quarter, with Financial Services and SURE businesses seeing healthy demand and manufacturing, excluding Daimler, performing well.
Telecom and retail remain weaker. The brokerage also expects large deal wins to normalise and discretionary spending to return, but sees limited evidence yet of a meaningful demand acceleration.
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AI-Led Pricing Deflation
JPMorgan said clients across different stages of AI adoption are increasingly seeking productivity benefits from service providers. Smaller deals with 12–18 month tenures have largely gone through an initial AI-deflation cycle, while larger and longer-duration contracts are still moving through it.
The brokerage expects the industry to remain in roughly year two or three of AI deflation, with the intensity moderating as newer AI models stop producing step changes in productivity. Infosys expects AI-led inflation to eventually emerge from three factors: continued growth in AI-led services, moderating deflation across existing portfolios and a normalisation in discretionary spending.
JPMorgan also flagged higher competitive intensity, particularly in vendor-consolidation deals. Infosys is winning some consolidation opportunities but remains unwilling to chase deals where pricing or commercial terms could dilute margins.
Margins, however, have remained steady, with gains from Project Maximus being redeployed towards sales and marketing investments, partnerships and employee reskilling.
The brokerage also noted the upcoming leadership transition. Infosys has appointed Ashiss Kumar Dash as CEO-designate, with the transition to take effect on April 1, 2027.
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