Accenture's Strong Q1 Results and AI Focus Boost Indian IT Sector Outlook

IT stocks rise after Accenture's robust Q1 results lift sentiments for sector

Shares of IT services firms such as Infosys, TCS, Wipro, and HCL Technologies rose by up to 1% on Friday, following a strong performance by industry leader Accenture. Accenture reported Q1 revenue and profit that exceeded Wall Street estimates and raised its annual forecast, signaling growing demand for IT services and boosting market sentiment for the sector.Shares of IT services firms like Infosys, TCS, Wipro, and HCL Technologies edged higher up to 1% on Friday, after IT forerunner Accenture beat Wall Street estimates for Q1 revenue and profit and raised its annual forecast, reflecting growing demand for IT services, and lifting market sentiment for the sector. Accenture reported a 9% year-on-year (YoY) revenue increase in US dollar terms to $17.7 billion, surpassing its guidance range of 2-6% growth. Managed services revenue jumped 11.3% YoY, while consulting revenue rebounded 7% YoY. The company also achieved record deal wins in the quarter, securing 30 contracts worth over $100 million each. Buoyed by these results, Accenture raised its FY25 revenue growth guidance from 3-6% to 4-7% and saw its shares climb 5% in premarket trading on December 19. The Nifty IT climbed 0.4%, buoyed by gains in domestic IT firms, with TCS and Infosys leading the charge. Brokerages viewed these results as a positive signal for Indian IT firms, which often mirror Accenture's performance due to similar service lines and market conditions. Nuvama Research noted that the stronger-than-expected execution of deals and the growing adoption of generative AI (GenAI) technologies create opportunities for sustained growth in the Indian IT sector. "We maintain a positive stance on the sector, and expect a sustainable strong demand environment, along with opportunities from Gen AI, to drive healthy earnings growth over the next three years," Nuvama said. Motilal Oswal echoed the optimism, citing Accenture's broad-based growth across geographies and verticals like healthcare and public services, which saw double-digit gains. The firm emphasized the stable demand environment and the increasing preference for large-scale transformation deals, trends that bode well for Indian IT players in managed services and consulting. Brokerage firm Nomura added that Accenture's GenAI-related bookings of $1.2 billion in Q1 highlight the sector's growing reliance on AI-driven solutions. The brokerage pointed to strong demand for data standardization and cloud adoption as enterprises prepare for deeper AI integration. It expects Indian IT firms to benefit from these trends while projecting a recovery in discretionary spending and decision-making clarity by FY26, as macroeconomic pressures ease. Also read | Demergers to watch out for in 2025: ITC, Vedanta, 3 others (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

TCS, Infosys, Wipro and other IT stocks in focus after Accenture's Q1 revenue beat and upgraded guidance

Accenture's strong Q1 earnings, driven by AI demand, boosted Indian IT stocks like Infosys and Wipro in US markets. Despite earlier losses due to the Fed's hawkish stance, the positive outlook signals potential growth for the sector. The company raised its annual revenue growth guidance, exceeding earlier projections.Indian IT stocks like TCS, Infosys, and HCL Tech are likely to be in the spotlight on Friday following Accenture's better-than-expected Q1 earnings and upgraded revenue guidance. Accenture's first-quarter revenue of $17.7 billion surpassed analyst estimates of $17.12 billion, driven by strong demand for its AI-powered solutions that help businesses optimize operations. The company reported new bookings of $18.7 billion, slightly higher than $18.4 billion in the same quarter last year. Annual revenue growth guidance was also raised to 4%-7%, exceeding earlier projections of 3%-6%. Following these results, Infosys's ADR surged 3.58% to $23.46 on Thursday, while Wipro's ADR climbed nearly 2.4% to $2.7171. American Depositary Receipts (ADRs) represent equity shares of foreign companies and allow American investors to trade them on U.S. exchanges. Accenture highlighted its focus on leveraging Generative AI to streamline operations across industries, from predictive manufacturing maintenance to automating advertising workflows. Businesses continue to invest heavily in scaling AI projects and digitizing core processes to improve efficiency and reduce costs, benefiting IT service providers like Accenture. Also Read: Large-caps likely to deliver better risk-adjusted returns Earlier on Thursday, Indian IT stocks received a severe hammering after Street appeared displeased with the hawkish commentary of the US Federal Reserve. The US Central Bank cut policy rates by 25 bps and said that its target of 2% inflation may not be achieved in 2025. There could now be only two cuts of 25 bps in 2025 as against the earlier expectation of 4 downward revisions suggested by the Fed's dot plot. The Nifty IT index closed with declines of 1.3% at 44,954.20. Seven counters fell in the 10-stock index with LTIMindtree as the biggest loser, falling by 5.3%. Infosys finished at Rs 1,948.50 on the NSE, down by Rs 30.65 or 1.55% over the Wednesday closing price. Meanwhile, Wipro closed flat at Rs 312.75. Also Read: Hot Stocks: 3 stocks that may give returns between 13-26% (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)