IT shares edge lower after TCS' Q4 numbers fail to impress investors

The sentiment soured further on the back of a subdued demand outlook, cautious brokerage commentary, and growing apprehension that fast-evolving AI models may steadily erode the revenue base of traditional IT services.

The Nifty IT index fell 2.31% to 30,904.40 while the benchmark Nifty 50 index rose 0.85% to 23,977.00.

Among the components of the Nifty IT index, Coforge (down 3.53%), Infosys (down 3.11%), Tata Consultancy Services (down 2.89%), Mphasis (down 2.68%) and LTIMindtree (down 1.93%) were the top losers.

Further, Tech Mahindra (down 1.76%), HCL Technologies (down 1.56%), Persistent Systems (down 1.21%) and Oracle Financial Services Software (down 0.15%) edged lower.

Tata Consultancy Services (TCS) reported a 2.08% rise in consolidated net profit to Rs 13,718 crore on 5.38% increase in revenue from operations to Rs 70,698 crore in Q4 FY26 as compared with Q3 FY26. The company's revenue in dollar terms was $7,621 million, which is higher by 1.5% on a sequential basis. In constant currency terms, revenue grew by 1.2% quarter-on-quarter (QoQ) during the period under review.

A global research house has reportedly maintained its 'underperform' rating on TCS, saying there is nothing to cheer'. The brokerage set a target price of Rs 2,275, which implies a 12% downside as compared with its previous close of Rs 2,589 recorded on the NSE yesterday. The research house noted limited signs of a meaningful pickup in demand for the company.

IT stocks have faced steep losses this year after Anthropic's Claude Cowork plug-ins threatened to automate jobs across legal, sales, marketing, and analytics. As per media reports, IT firms may need to cut headcount as AI grows faster and cheaper.

Meta launched Muse Spark, the first model from its new Meta Superintelligence Labs, set to power a smarter Meta AI with richer features across Instagram, Facebook, and Threads.