The Infosys share price has rallied 5% in the early trade after the IT bellwether announced strong Q3 results and updated its outlook for the current financial year. The street has given a big thumbs to the revised FY26 revenue guidance of 3-3.5% and brokerages see room for significant upside.

Why the guidance upgrade matters

According to brokerage reports, the upward revision in revenue guidance has become the key trigger for renewed interest in the stock.

The company also highlighted strong deal momentum. Large deal total contract value during the quarter stood at about $4.8-4.9 billion, with around 57% of these wins coming from new clients. Management indicated that these deal wins, along with artificial intelligence partnerships, could support growth in sectors such as banking and financial services, as well as energy, utilities, resources and services in the coming years.

Let’s take a look at why the brokerages have given a ‘Buy’ rating and what is the rationale driving the recommendation-

Motilal Oswal on Infosys: AI services seen as the next growth lever

Motilal Oswal Financial Services has taken a more optimistic view, valuing Infosys at a target price of Rs 2,200, which implies an upside of up to 38%. According to the brokerage report, the guidance upgrade is an early sign that spending on artificial intelligence services could pick up meaningfully from mid-2026.

The brokerage expects revenue growth to improve in FY27, supported by recovery in discretionary spending in financial services and energy-related sectors. Motilal Oswal also pointed out that healthcare revenue benefited from the ramp-up of a large National Health Service contract in the United Kingdom.

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As per the brokerage report, margin performance was aided by currency movement and internal productivity initiatives, although furlough costs offset some of these gains. The brokerage expects margins to remain range-bound in the near term but believes the risk-reward remains favourable at current valuations.

Nomura on Infosys: Focus on deal wins and AI opportunities

Nomura has maintained a ‘Buy’ rating on Infosys and has set a target price of Rs 1,810 for the stock. This implies an upside of around 13% from current levels. According to the brokerage report, the guidance upgrade suggests a gradual improvement in growth visibility despite ongoing macro uncertainty.

Nomura noted that large deal wins of about $4.85 billion and a rising share of net new deals support medium-term growth. The brokerage also pointed to management commentary around six artificial intelligence-related opportunity areas, including AI engineering services, data platforms for AI, software modernisation and AI services for physical devices.

As per the brokerage report, operating margins were supported by internal efficiency initiatives and currency benefits, even as furlough-related expenses acted as a drag. Nomura expects margins to remain broadly stable within the guided range going forward.

Nuvama on Infosys: Strong execution and visibility ahead

Nuvama Institutional Equities has also reiterated a ‘Buy’ call on Infosys. The brokerage house has raised its target price to Rs 1,900 from Rs 1,800 earlier. This implies an upside potential of over 18%.

According to the brokerage report, the IT bellwether has delivered better-than-expected revenue growth in the December quarter. The company reported an operating margin of 21.2%, in line with estimates.

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Furthermore, the brokerage house in its report highlighted that management upgraded revenue guidance without factoring in any contribution from the joint venture with Telstra, while maintaining margin guidance. The brokerage noted that large deal signings, including a $1.6 billion healthcare contract in the United Kingdom, provide visibility for growth in the coming quarters.

As per the brokerage report, Infosys has also added around 13,500 employees during the first nine months of financial year 2026, indicating preparation for future demand. Nuvama believes valuations remain reasonable, especially after the stock’s recent correction, and sees the company as well placed if global technology spending improves.

Infosys Q3FY26 results snapshot

The IT giant reported a net profit of Rs 6,654 crore for the third quarter of FY26, a drop of 9.6% compared to Rs 7,364 crore in the September quarter. Revenue, however, moved higher on a quarter-on-quarter basis. The company’s revenue rose 2.2% to Rs 45,479 crore from Rs 44,490 crore in the previous quarter.

At the operating level, earnings before interest and tax, a key measure of core profitability, rose 1.3% quarter-on-quarter to Rs 9,479 crore. Meanwhile, the operating margin of the company slipped slightly to 20.8% from 21% in the previous quarter, mainly due to higher costs.

Along with the results, Infosys raised its revenue growth guidance for financial year 2026 to 3.0–3.5% in constant currency terms, from its earlier estimate of 2-3%. The company maintained its operating margin guidance of 20-22%.

Conclusion

Despite a sequential decline in profit, brokerages tracking Infosys appear aligned on one key point – the improved revenue outlook, strong deal pipeline and growing role of artificial intelligence services have improved visibility beyond the near term.