Infosys Forecasts 1–2% Q1 Growth as AI Shift Delays Deals
INFY•Infosys forecasts Q1 constant-currency revenue growth of 1–2%, down from the prior quarter’s 5.9% increase, as clients delay legacy IT contracts in favor of AI projects. Weak demand in banking and retail verticals and higher AI talent investments are expected to tighten operating margins by about 100 basis points.
1. Q1 Revenue Guidance
Infosys projects constant-currency revenue growth of 1–2% for the June quarter, marking its slowest expansion in over a year and a sharp deceleration from the 5.9% gain in the prior quarter.
2. AI-Driven Service Shift
Major clients are reallocating budgets from traditional IT outsourcing toward AI and automation initiatives, resulting in postponed large-scale legacy contracts and a shift in Infosys’s service mix.
3. Vertical Demand Trends
Banking and retail segments reported the largest drop in new deal signings, while telecom and energy clients showed only marginal spending increases, reflecting uneven sectoral recovery.
4. Margin Outlook and Investments
Rising salary hikes and increased hiring for AI expertise are expected to reduce operating margins by around 100 basis points, prompting Infosys to pursue efficiency programs and automation tools to offset cost pressures.
