Infosys ended FY26 with a milestone and a warning in the same breath. Revenue crossed $20 billion for the first time, but the company’s guidance for FY27 stood at a mere 1.5%-3.5% growth in constant currency terms, underscoring a cautious demand environment even as AI-led deals pick up.
For the March quarter, Infosys reported revenue of ₹46,402 crore, up 13.4% year-on-year, but down 1.3% sequentially in constant currency terms. Full-year revenue stood at ₹1,78,650 crore, a 9.6% increase, translating to 3.1% growth in constant currency.
Operating margin came in at 21.0% for the quarter and 20.3% for the year, while EPS rose 23.8% YoY in Q4 and 11.0% for the full year. Free cash flow remained strong at $3.7 billion for FY26.
The headline numbers, however, were anchored by deal momentum and AI positioning. Infosys reported $14.9 billion in large deal wins for the year, including $3.2 billion in Q4, with management repeatedly pointing to enterprise AI as the core driver.
“We delivered a resilient performance in FY26 with growth of 3.1% with strong large deal wins of $14.9 billion, reflecting the robustness of our enterprise AI value proposition,” CEO Salil Parekh said. “The simplicity and strength of our AI services strategy across six areas is gaining traction in the market further strengthened by strong ecosystem AI partnerships enabling clients to get value from AI.”
AI Growth is Real, But Still Opaque
Infosys is increasingly framing its business around AI, but continues to avoid providing precise revenue figures. Parekh reiterated that AI-led work is growing faster than the rest of the business.
He said the company is targeting a “very good market share” of the $300- $400 billion AI services opportunity projected for 2030.
In Q3, Infosys had indicated that AI contributed around 5.5% of revenue. In Q4, the tone shifted from disclosure to emphasis. However, he declined to give AI-specific revenue numbers.
The company’s AI strategy now hinges on its Topaz Fabric and a six-pronged services approach spanning agentic AI, legacy modernisation, and AI-led operations. Large deals increasingly combine cost takeout with AI-driven transformation, which Infosys believes offsets pricing pressure.
“Infosys Topaz Fabric and Devin together offer unmatched capability from real-time developer augmentation to fully autonomous engineering execution,” the company said in a statement.
There is, however, a structural tension. AI is simultaneously expanding deal scope and compressing revenue through productivity gains. Parekh acknowledged this dynamic. “While there is compression, the growth part of our work is larger today than the compression, which is why we are growing,” the CEO said.
Growth Pockets Hold, but Macro Remains Uneven
Infosys’ guidance reflects a mixed demand environment. Management flagged stronger momentum in financial services and energy, utilities, and resources, while manufacturing, especially European auto, remains weak.
“What we are seeing right now is financial services… we are seeing an acceleration of our growth next year,” Parekh said. At the same time, he acknowledged ongoing uncertainty. “Global environment… seems to be paths towards things stabilising… but we’ll see how it plays out.”
Parekh said they are seeing momentum in the financial services business and are likely to see accelerated growth for the next year. He also acknowledged the ongoing uncertainty, noting that the global environment seemed to be moving toward stabilisation, but that the outcome remained uncertain.
CFO Jayesh Sanghrajka added that FY26 growth would have been higher if not for a 1% drag from lower third-party revenue and a 70 basis point impact from onsite mix changes.
AI deals are changing the structure of IT services
The bigger shift is structural. Infosys is no longer pitching traditional outsourcing, but bundled AI-led transformation deals that combine technology and operations.
Parekh described three growth engines: AI services, large deals, and expansion within existing clients. In many cases, AI-led productivity is paired with adjacent work.
This is critical because AI is also cannibalising parts of the legacy business. Clients are demanding upfront efficiency gains, forcing IT vendors to reprice work even as they pursue new revenue streams.
The IT giant ended FY26 with stable margins, strong deal wins, and a clearer AI narrative. But the low growth guidance for FY27 suggests that AI is not yet translating into broad-based acceleration.
It is effectively in a transition phase where AI is visible in the pipeline and deal wins, but still uneven in revenue contribution. Growth is being supported by large deals and select verticals, while pricing pressure and macro uncertainty persist.
The next year will test whether Infosys can convert its AI positioning into sustained revenue growth, or whether productivity-led compression continues to offset gains.
Comparatively, Infosys has reported a better quarter than peers like TCS, Wipro, and HCLTech, which have reported declines in revenue in several cases and negative guidance.
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