The IT stocks have been battered thus far in 2026 but is the correction finally over? The Brokerage house, Anand Rathi sees the IT sector at the threshold of a ‘new phase’. The brokerage said, “The AI cycle is pivoting from ‘building capacity’ to ‘proving payback’, and that shift is inherently services-heavy.”

According to the report, the Indian IT sector witnessed a sharp slump due to weak discretionary spending by global clients, concerns about AI reducing demand for IT services, tighter H1-B visa rules, and a selloff triggered by AI developments such as Claude in early 2026.

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However, the brokerage expects the outlook to improve going forward. The top five hyperscalers spent about $410 billion in capital expenditure in CY25, which is expected to rise to around $705 billion in CY26, a jump of about 71% year-on-year. As these investments grow, Anand Rathi believes, companies are likely to focus on generating returns from AI, creating demand for services such as AI deployment, integration, governance, and legacy system modernisation.

The brokerage house is bullish on these 5 IT stocks. 

1. Infosys: Anand Rathi sees 21.2% upside

Anand Rathi has given a ‘Buy’ rating to this IT behemoth, Infosys. It has set a target price of Rs 1,547. This implies to an upside potential of 21.2% from current price.

The brokerage said that “Infosys is uniquely positioned to capture a disproportionate share of $300-400bn AI services opportunity by 2030.”

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AI already contributes about 5.5% of Infosys’ revenue. The company’s Topaz Fabric platform includes over 600 AI agents and is deployed across 90% of its top 200 clients. Its partnership with Anthropic also strengthens its role in enterprise AI adoption, including legacy modernisation, data engineering and AI-driven workflows.

2. HCLTech: Anand Rathi sees sees 17.4% upside 

For HCLTech, Anand Rathi has set a target price of Rs 1,585 which suggests an upside of about 17.4%.  

“The company has a strong growth track record, driven by a diversified revenue mix across IT Services, ER&D and HCL-Software,’ Anand Rathi highlighted. Strong AI-driven deal wins have helped HCLTech generate new bookings of over $3 billion. 

3. LTM: Anand Rathi sees sees 24% upside

For LTM, Aand Rathi has set the target price of Rs 5,305, which implies around 24.1% upside.

LTM continues to win large deals, including projects such as PAN 2.0, ADM, Paramount and European MedTech. It is expected to deliver around 2 percent constant currency organic growth, the highest among large IT firms. “As the weakness in largest BFSI client bottoming out, it should set it for a robust FY27,” Anand Rathi noted.

4. Persistent Systems:Anand Rathi sees 21% upside

In the midcap space Anand Rathi has a ‘Buy’ rating on Persistent Systems. The brokerage has set a target price of Rs 5,751 which implies an upside of about 21.1%.

“Its dual AI strategy (AI for Technology and AI for Business) is aided by proprietary platforms (SASVA, iAURA and GenAI Hub), which accelerate software development cycles and help clients via automation/intelligent workflows,” Anand Rathi noted. 

5. Mphasis: Anand Rathi sees 28.7% upside 

Another Mid cap IT firm on which Anand Rathi is bullish is, Mphasis. It has set the target price of Rs 2,807 for Mphasis. Which suggests around 28.7% upside.

Anand Rathi noted that Mphasis is positioning itself as an AI-led transformation partner through platforms such as NeoIP and NeoZeta.The BFSI sector, which contributes about 67 percent of revenue, remains its key growth driver, with the BFSI deal pipeline rising nearly 98 percent year-on-year in Q3FY26, signalling a potential recovery in FY27.

Conclusion: Growth outlook improves, but risks remain

Despite near-term challenges, Anand Rathi expects Indian IT revenue growth to recover in the coming years as enterprise AI adoption gains pace. 

However, the brokerage warns that the risks persist. Risks to watch include global economic weakness, slower scaling of AI pilot projects, faster-than-expected automation reducing service demand, and trust issues related to AI accuracy and reliability.

“We are constructive yet selective, favouring scaled vendors with enterprise deployment credibility,” Anand Rathi said. 

Interestingly, another leading brokerage house, Nuvama has also turned positive on the top-10 IT Services companies in a recent report last week. They have also upgraded key IT Services plays and reiterated Buy rating on top firms. International brokerage house, Nomura too has listed out its top picks in the IT sector.

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.