The damage was immediate and visceral. Infosys ADRs shed 6% in early NYSE trade, erasing value at a pace that rattled even seasoned IT sector watchers. The trigger? A guidance cut. The company trimmed its FY27 constant currency revenue growth forecast to 1-2%, down from the previously guided 1.5-3%. For context, this is the lowest growth band Infosys has signaled in seven years. It’s a stark admission that the post-pandemic growth spurt has officially cooled.
The numbers behind the cut paint a grim picture for the North American market, the company’s lifeblood. Revenue there declined 1.5% year-on-year. The bleeding was concentrated in high-tech and retail, which dropped 17.3% and 7.7% respectively in constant currency terms. CFO Jayesh Sanghrajka didn’t mince words about the cause: volumes were subdued, and pricing power was under siege from competitive intensity and clients demanding higher productivity. It wasn’t a broad macro collapse, he argued, but specific client situations driving the drag.
CEO Salil Parekh tried to stabilize the narrative, insisting the weakness was isolated. “We continue to see strong growth and discretionary spending in financial services, energy and utilities, and manufacturing,” Parekh stated. He pointed to AI as the silver lining. AI-related revenue hit 10.5% of the total, up from 8.2% in the prior quarter, with a 29% sequential jump. In a market where AI is the only growth story investors still believe in, that 29% figure is the only reason the stock didn’t trade lower.
Financially, the September quarter showed resilience in the top line but fragility elsewhere. Revenue rose 1.3% year-on-year to $5.1 billion. Yet, the market is punishing the trajectory, not the current state. With the operating margin guidance held firm at 20-22% for FY27, the onus is now on Infosys to prove that the AI pivot can offset the structural decline in its core high-tech and retail verticals. The next earnings call will be a referendum on whether that pivot has enough traction to save the valuation.