Brokerages remained largely bullish on Tata Consultancy Services (TCS) and welcomed the IT major’s aspirations to become the world’s largest AI-led tech services giant, sending its shares up 2% on Thursday. Analysts hailed the company’s decision to focus on acquisitions to build AI capability and expect it to emerge as a key beneficiary of a recovery in global tech spending.
At its analyst day on Wednesday, CEO K Krithivasan outlined the company’s five-pillar strategy to capitalise on the ongoing tech transition and disclosed its revenue from AI deals for the first time. Annualised revenue from AI services hit $1.5 billion, growing at 16.3% quarter-on-quarter in Q2FY26. This accounted for 5% of FY26’s estimated revenue, compared to Accenture’s $2.7 billion, which represented nearly 4% of its total revenue.
Deciphering $1.5 Billion AI Revenue Breakthrough
“Demand for modernisation of enterprise technology stack is intensifying, as clients look forward to AI transformation at scale,” ICICI Securities analysts said in a report. The brokerage sees 5% upside to TCS’s stock and maintains its “Add” rating.
TCS gathers $11 billion in revenue from next-gen services, including AI services, cloud, interactive, cybersecurity, enterprise solutions, IoT, and digital engineering, forming 37% of overall revenue. Out of these, the report notes, AI services is growing at a strong double-digit rate of 28.2% year-on-year on constant currency terms, but the rest of the services are growing at single-digit rates of 6-9%.
Nuvama, which is also bullish on a stock as it sees an 11% upside, expects TCS to be one of the biggest beneficiaries of the recovery in tech spending. Morgan Stanley analysts echoed these sentiments, adding that the enterprise AI journey and AI will expand the company’s addressable market.
Strategic M&A
Analysts also favoured the company’s pivot to M&A to speed up capability creation in AI, complementing its organic growth efforts. The company has acquired Coastal Cloud, a US-based Salesforce Summit Partner, and ListEngage, a US-based Salesforce consulting firm, over the last two months.
“The acquisitions of ListEngage and Coastal Cloud have positioned TCS to expand the Salesforce services market to $30 billion in CY30 (vs $20 billion in CY25), targeting the top-five global-advisory status,” noted analysts at Emkay Global.