In a significant move highlighting the global surge in AI investment, Infosys, India’s second-largest software services exporter, has sealed a major deal to provide cutting-edge artificial intelligence (AI) and automation services over the next five years. The agreement cited by Reuters, with a targeted spend of $2 billion, encompasses a broad scope of AI and automation-related development, modernization, and maintenance services, signaling a strategic push by Infosys to bolster its capabilities in the rapidly evolving AI landscape.
The client’s identity remains concealed, but Infosys has emphasised the inclusion of AI and automation services in their recent exchange filing. This landmark deal comes in the wake of the remarkable success of Microsoft-backed OpenAI’s generative chatbot ChatGPT in late 2022, prompting companies worldwide to increase their investments in AI technologies.
Growing AI investments among Indian IT giants
Infosys’ rival, Tata Consultancy Services (TCS), had recently announced plans to train 25,000 engineers for certification on Microsoft’s Azure Open AI, underscoring the fierce competition in the AI domain among Indian IT giants. Additionally, Wipro, another key player in the industry, revealed its intentions to invest $1 billion in AI over the next three years, further indicating the sector’s growing focus on harnessing the potential of AI technologies.
In late May, Infosys unveiled Infosys Topaz, a groundbreaking platform dedicated to generative AI. This innovative platform aligns perfectly with Infosys’ strategic vision to advance AI capabilities and deliver state-of-the-art solutions to its esteemed clientele.
Market anticipation rises
The recent announcement of the undisclosed client’s AI and automation deal with Infosys has sparked anticipation among market watchers ahead of the company’s first-quarter results, scheduled for release on July 20. In the quarter that ended on March 31, 2023, Infosys demonstrated its robust growth, serving 40 clients in the $100 million-plus category, an increase from the 38 clients it had in December 2022.
Reuters cited Financial analysts at ICICI Securities, who projected Infosys to report a 0.8 per cent constant currency growth on a sequential basis in the June quarter. They anticipate the following September quarter to remain soft for the company, given the absence of significant mega-deal ramp-ups during that period. While the brokerage expects Infosys to narrow its revenue growth guidance for the financial year 2024 to 4-6 per cent from the current 4-7 per cent, it maintains an optimistic outlook, predicting attractive risk-reward prospects for Infosys’ stock. ICICI Securities foresees a substantial 12.8 percent and 12.4 percent constant currency revenue growth in the financial year 2025 and 2026, respectively.
In the last month, shares of Infosys have shown promise, rising by 10 per cent and mitigating most of the losses incurred earlier in the year. Although it remains the only Nifty IT constituent with negative returns on a year-to-date basis, the narrowing losses compared to the 2023 lows have sparked renewed investor interest in the company.
(With Inputs from Reuters)
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