Infosys (INFY) Stock Forecast & Price Target

Infosys is supported by a large and improving demand backdrop, highlighted by a $2B+ net new financial services mega deal within $5.2B of total large deal TCV and $3.5B+ of FS large deal TCV in 2Q, which should help offset the large Euro auto client program loss expected in F4Q27 through F3Q28. AI-related revenue is a major catalyst, with AI at 10.5% of revenue growing 29% q/q and estimated to be up 150%+ y/y, while strong momentum across banking, payments, capital markets, and Europe points to durable sector demand. Margin visibility and support also look constructive, as known salary increments reduce uncertainty and Project Maximus, an increasing offshore mix, utilization gains, and cost controls should help preserve profitability even as spending remains cautious.

Infosys is facing a deteriorating fundamental backdrop as macro uncertainty, AI-driven productivity, and intensifying competition are pressuring both pricing and volume, leading to a cut in FY27 growth guidance and a muted organic outlook. The company’s 2Q performance showed weaker discretionary demand in Retail and Hi-Tech, client ramp-downs, and large contract losses that offset strong AI demand and large-deal traction, while 2Q EBIT margin of 21.0% still faces 2H pressure from wage hikes, M&A amortization, and seasonal bill-day effects. Although management is benefiting from FX, FCF, and some margin support, the persistent offshore outsourcing headwind and slower backlog conversion suggest that a durable recovery may remain a multi-year journey.