The short version
Infosys (INFY) reported on 23 October. Revenue of $5.145 billion, up 1.5% year on year. Operating margin held at 21%.
Its AI business is booming. AI now accounts for 10.5% of revenue and grew 29% in a single quarter.
The company as a whole is barely growing. Total revenue rose 1.2% sequentially in constant currency, and full-year guidance was cut again, to 1-2%.
Put those two facts together and you get the story: the AI part is growing fast enough that the rest of the business must be shrinking. That is the whole IT services industry in one quarter.
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What did Infosys report?
Quarter ended September 2026, announced 23 October:
- 💵 Revenue: $5.145 billion, up 1.5% year on year, up 1.2% sequentially in constant currency
- 📊 Operating margin: 21.0%, stable
- 📈 Earnings per share: up 8.7% year on year in rupee terms
- 🤝 Large deal wins: $5.2 billion, with 62% of that new business rather than renewals
- 🤖 AI revenue: 10.5% of the total, up 29% on the previous quarter
The deal wins are the genuinely encouraging number. 62% net new means Infosys is taking work it didn't have before, not just renewing what it already had.
What happened to guidance?
It has been cut twice this year.
- April 2026: full-year revenue growth guided at 1.5-3.5%
- July 2026: revised to 1.5-3.0%
- October 2026: revised again to 1-2%
The top of the range has halved in six months. Margin guidance has held at 20-22% throughout, which matters: the company is protecting profitability while growth slows, not chasing revenue at any cost.
For context, Infosys grew 3.1% in the year to March 2026 on revenue of $20.2 billion. The current year is tracking well below that.
The arithmetic worth doing yourself
If AI is 10.5% of revenue and grew 29% in a quarter, it added more growth than the company reported in total.
Rough maths, and it's ours rather than the company's:
- AI at 10.5% of revenue, having grown 29%, means it was around 8% of revenue three months earlier.
- That growth alone is worth roughly 2.4 percentage points of total revenue.
- Total sequential growth was 1.2%.
So the other ~90% of the business shrank. Not dramatically, but it shrank, while the AI piece grew at a pace most companies never see.
That is the clearest picture anyone has published of what AI is doing to IT services: it is creating a fast-growing new business and eroding the old one at the same time, inside the same company, in the same quarter.
Is that an Infosys problem or an industry one?
Industry. And the company says so itself.
Infosys's own annual filing puts it plainly: radical transformation led by AI is shifting discretionary spending and putting mounting pressure on traditional IT services.
That's a company describing the threat to its own core business in a regulatory document, which is about as candid as corporate disclosure gets.
Why the old model is under pressure: traditional IT services sold people's hours. More work meant more people. AI breaks that link, because a tool that makes developers faster reduces the hours a client needs to buy.
Why Infosys might still win: it is selling the AI transformation itself, with partnerships across the major AI companies, and $5.2 billion of large deals in a single quarter says clients are buying. The question is whether the new revenue grows faster than the old revenue falls.
Right now, it doesn't quite.
What could go wrong?
- ✂️ Guidance has been cut twice in six months. The top of the range halved. A third cut would say the AI transition is going slower than hoped.
- 📉 The non-AI business is the majority and it's shrinking. A tenth of revenue growing fast cannot carry nine-tenths that is flat to falling, at least not yet.
- 💰 AI work may be cheaper to deliver and cheaper to buy. If clients need fewer hours, revenue per client can fall even when the relationship grows.
- ⚔️ Everyone is making the same pitch. TCS, Wipro, HCL, Accenture and every global consultancy are selling AI transformation. Differentiation is hard to prove from outside.
- 💱 Currency matters here. Infosys reports in dollars and rupees, and a US-listed share adds a second exchange-rate layer for anyone holding it.
INFY is an example to research, not a recommendation.
What should investors take from this?
When a company reports a fast-growing segment, work out what it implies about the rest.
The segment number alone is marketing. The segment number set against the total is analysis. In this case:
- 🔍 AI up 29% in a quarter sounds transformational.
- 🧮 Total up 1.2% tells you what it actually changed.
- 📊 The gap tells you what's happening to everything else.
It's the same discipline we applied to price versus volume at Nestlé India and to SanDisk's 175% revenue growth on mid-teens volume: one headline number, one underlying number, and the truth sitting in the difference.
Two more habits:
- 📅 Track guidance across quarters, not just the latest figure. Three data points showed a halving that no single release announced.
- 📄 Read the annual filing's risk language. Infosys described AI pressuring traditional IT services in its own 20-F. Companies are often more honest there than on earnings calls.
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FAQs
What did Infosys report for Q2 FY27?
Revenue of $5.145 billion for the quarter ended September 2026, up 1.5% year on year and 1.2% sequentially in constant currency. Operating margin was 21.0%, earnings per share rose 8.7% in rupee terms, and large deal wins totalled $5.2 billion with 62% net new.
How much of Infosys revenue is AI?
AI accounted for 10.5% of revenue in the quarter and grew 29% from the previous quarter, up from 8.2% reported in the June quarter.
Why did Infosys cut its guidance?
Full-year revenue growth guidance was revised to 1-2%, from 1.5-3.0% in July and 1.5-3.5% in April. Margin guidance was retained at 20-22%. Infosys has said that AI is shifting discretionary technology spending and putting pressure on traditional IT services.
Is AI good or bad for Infosys?
Both, so far. AI is its fastest-growing revenue line, while the company's own filings describe AI as putting mounting pressure on traditional IT services, which remains the large majority of its business.
Can I buy Infosys shares from the UAE?
Infosys trades on the NYSE as an American Depositary Share under the ticker INFY, as well as on Indian exchanges. On Nemo.money you can invest in eligible US-listed stocks and ETFs from $1 with zero commission, with uninvested cash earning 6% AER interest, paid daily in USD. INFY is an example to research, not a recommendation. Your capital is at risk.
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