The rise in technology spending by banks, increasingly skewed towards artificial intelligence (AI), is likely to be favourable for Indian IT services companies. However, the key focus will remain on which vendors are gaining market share of the incremental technology spending, analysts said.
Technology spending by global banks is entering a structural reinvestment cycle. The technology wallet of seven global banks has increased around 16% since June 2024, while spending grew 7.8% year-on-year (YoY) in June 2026.
According to Choice Institutional Equities, the technology spending trajectory by global banks has remained resilient despite an uneven macro environment. JPMorgan, Goldman Sachs, Morgan Stanley and Wells Fargo delivered a double-digit YoY technology-spend growth.
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The spending is increasingly skewed towards AI, cybersecurity, cloud, data and modernisation, with AI accelerating the broader technology transformation cycle.
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The brokerage firm believes that this creates a favourable setup for Indian IT services, but the opportunity is likely to be disproportionately captured by vendors with scale, domain depth and a larger share of the banking wallet.
“Q1FY27 commentary broadly validates the bank-side signal, with BFSI growth across TCS, Tech Mahindra, Coforge and Mphasis. The key takeaway is that BFSI demand remains relatively resilient versus several other verticals, providing a favourable demand pool for Indian IT,” said Choice Institutional Equities.
For Indian IT, the key question is, not how fast bank technology spending is growing, but which vendors are gaining share of the incremental wallet, it added.
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Choice Institutional Equities favours vendors combining scale, BFSI domain depth, modernisation capabilities and differentiated AI offering, while recognising that AI-led productivity and outcome-based pricing could limit revenue conversion.
“The opportunity is, therefore, structural wallet expansion plus vendor share gains, with AI as the key growth catalyst,” said the brokerage firm.
It sees Coforge, Persistent Systems and Tech Mahindra as the best-positioned beneficiaries of this trend. These three IT stocks remain its top investment ideas.
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Here are the top IT stock picks by Choice Institutional Equities:
Coforge | Buy | Target Price: 2,050
Persistent Systems | Buy | Target Price: Rs 6,350
Tech Mahindra | Add | Target Price: Rs 1,775
Zensar Technologies | Add | Target Price: Rs 550
Happiest Minds Technologies | Add | Target Pirce: Rs 440
Tata Consultancy Services | Reduce | Target Price: Rs 2,320
Infosys | Reduce | Target Price: Rs 1,140
Wipro | Reduce | Target Price: Rs 170
HCL Technologies | Reduce | Target Price: Rs 1,330
Mphasis | Reduce | Target Price: Rs 2,520
LTM | Sell | Target Price: Rs 4,350
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