Infosys Stock Down Over 2% As Jefferies Cuts Target Price on AI Concerns
· Free Press Journal
The stock of Bengaluru-based IT (information technology) services firm Infosys declined over 2 percent to Rs 1,325 during the early trade hours on Monday.
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While the stock opened higher at Rs 1,354 than its previous close of Rs 1,352, it fell to as low as Rs 1,322 during the trade.
The decline in the stock comes after global brokerage firm Jefferies downgraded the stock to a “hold” rating from a “buy” rating earlier, according to a report by CNBC TV18. The brokerage cut the target price of the stock from Rs 1,880 earlier to Rs 1,290 in a note on Monday.
Infosys-Anthropic Tie-Up Signals New AI Upside For Indian IT Sector: JefferiesThe sharp downward revision in the stock price indicates a 5% cut from the stock’s closing price on Friday.
The rationale behind the downgrade has been cited as the impact of artificial intelligence (AI) technology in the IT sector. According to Jefferies, the technology will change the nature of the business of IT giants like Infosys.
Infosys is the second-largest IT sector company in India, followed by Tata Consultancy Services. The Jefferies note said that AI will direct these companies towards consulting and implementation, while the scope of services management will shrink.
Top-10 Valued Firms Add ₹63,478 Crore In Market Cap, L&T & SBI Lead GainsThis would increase cyclicality in the business and require companies to onboard relevant talent and operating models.
Infosys reported revenue of Rs 37,996 crore and a profit of Rs 7,363 crore in the December quarter.
During a press conference after the Q3 result announcement, the company’s Chief Executive Officer and Managing Director, Salil Parekh, said that its clients are adopting AI fast and Infosys is working with 90% of its 200 largest customers to unlock value with AI in business.
“We are currently working on 4,600 AI projects. Our teams have generated over 28 million lines of code using AI. We have built over 500 agents. We are scaling our forward-deployed engineer team,” Parekh had said.