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Infosys (INFY)
NYSE:INFY
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Infosys (INFY) AI Stock Analysis

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INFY

Infosys

(NYSE:INFY)

Rating:75Outperform
Price Target:
$18.50
â–²(8.76% Upside)
Infosys' strong financial performance and robust earnings call highlights are the primary drivers of its overall score. The company's consistent revenue growth, profitability, and cash flow management are significant strengths. However, technical analysis indicates bearish momentum, and the valuation is moderate. The mixed outlook and cautious client spending present challenges, but the company's leadership in AI and strong European performance provide positive long-term prospects.
Positive Factors
Financial Performance
Infosys reported fiscal first-quarter results that were slightly above consensus on the top line and above on gross margin.
Market Share
Infosys has significantly expanded its global market share in IT services over the past 12 years, going from 0.8% in 2012 to approximately 3.5% in 2023.
Negative Factors
Demand Challenges
Management characterized the demand environment as remaining challenging, with tariffs and geopolitical issues driving elongated deal cycles and slower demand for discretionary projects.
Economic Environment
Infosys's guidance for FY26 was below expectations, reflecting concerns about a weakening economic environment.

Infosys (INFY) vs. SPDR S&P 500 ETF (SPY)

Infosys Business Overview & Revenue Model

Company DescriptionInfosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. It provides digital marketing and digital workplace, digital commerce, digital experience and interactions, metaverse, data analytics and AI, applied AI, generative AI, sustainability, blockchain, engineering, Internet of Things, enterprise agile DevOps, application modernization, cloud, digital process automation, digital supply chain, Microsoft business application and cloud business, service experience transformation, energy transition, cyber security, and quality engineering solutions; Oracle, SAP, and Saleforce solutions; API economy and microservices; and Topaz, an AI-first set of services, solutions, and platforms using generative AI technologies. The company's products and platforms include Finacle, a core banking solution; Edge suite of products; Panaya platform, Infosys Equinox, Infosys Helix, Infosys Applied AI, Infosys Cortex, and Stater digital platforms; and Infosys McCamish, an insurance platform. It serves aerospace and defense, agriculture, automotive, chemical manufacturing, communication, consumer packaged goods, education, engineering procurement and construction, healthcare, high technology, industrial manufacturing, information services and publishing, insurance, life science, logistics and distribution, media, entertainment, mining, oil and gas, private equity, professional, public, retail, travel, hospitality, utilities, and waste management industries. The company was formerly known as Infosys Technologies Limited and changed its name to Infosys Limited in June 2011. Infosys Limited was incorporated in 1981 and is headquartered in Bengaluru, India.
How the Company Makes MoneyInfosys generates revenue primarily through its IT services and consulting offerings, which include software development, maintenance, and support, as well as business process outsourcing services. The company operates on a project-based billing model, where clients are charged based on the services rendered, often through fixed-price contracts or time-and-material agreements. Key revenue streams include large-scale contracts with Fortune 500 companies, particularly in industries like banking, insurance, and retail. Additionally, Infosys has established significant partnerships with major technology firms, such as Microsoft, AWS, and Google Cloud, enhancing its service capabilities and expanding its market reach. The company also invests in research and development to create proprietary solutions, further driving its revenue growth.

Infosys Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q1-2026)
|
% Change Since: -6.85%|
Next Earnings Date:Oct 16, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. Infosys reported strong revenue growth, large deal wins, and leadership in AI, but faced challenges with operating margin declines, increased attrition, and client spending caution due to macroeconomic uncertainties.
Q1-2026 Updates
Positive Updates
Strong Revenue Growth
Infosys reported a sequential revenue growth of 2.6% and a year-on-year growth of 3.8% in constant currency terms for Q1 FY '26.
Large Deal Wins
The company secured large deals worth $3.8 billion, including 55% net new deals, reflecting strong client relationships and delivery capabilities.
Enterprise AI Leadership
Infosys showcased its leadership in enterprise AI by building 300 AI agents and being recognized as a leader in Gartner's first generative AI consulting and implement services quadrant.
Cash Flow and Profitability
Infosys reported free cash flow of $884 million, which is 109% of net profit, marking the fifth consecutive quarter of free cash flows exceeding net profit.
Geographic Growth
Europe demonstrated strong performance with a 12.3% year-on-year growth, over three times the company average.
Negative Updates
Operating Margin Decline
Operating margin for Q1 was 20.8%, a decline of 20 basis points sequentially and 30 basis points year-on-year.
Increased Attrition
Attrition rates increased marginally to 14.4%.
Challenges in Manufacturing and Retail Sectors
The manufacturing segment faced challenges with decision-making delays and soft discretionary spend, while retail saw muted spending due to tariff uncertainty.
Cautious Client Spending
Clients remained cautious in their discretionary spending due to tariff and geopolitical uncertainties, leading to delayed decision-making.
Company Guidance
In the Q1 FY '26 earnings call for Infosys, the company reported a sequential revenue growth of 2.6% and a year-on-year increase of 3.8% in constant currency terms. The operating margin stood at 20.8%, while the free cash flow was $884 million. Large deals totaled $3.8 billion, with 55% being net new. The company revised its revenue growth guidance for FY '26 to 1%-3% in constant currency, maintaining its operating margin guidance at 20%-22%. The leadership highlighted the company's strong performance in enterprise AI, with 300 AI agents deployed across various sectors, and noted robust demand in areas like cloud and data analytics. Despite the positive start, the executives remained cautious due to ongoing global uncertainties, including tariff issues and geopolitical tensions, which continue to impact client spending and decision-making processes.

Infosys Financial Statement Overview

Summary
Infosys presents a strong financial profile with consistent revenue growth, high profitability margins, and robust cash flow generation. The company maintains a healthy balance sheet with low leverage and strong equity financing. While profitability slightly dipped in the most recent year, the overall financial health remains solid. Infosys' effective cash management ensures liquidity and the ability to fund growth initiatives.
Income Statement
88
Very Positive
Infosys has demonstrated consistent revenue growth over the years, with a notable increase from $13.56B in 2021 to $19.28B in 2025. The gross profit margin is healthy at approximately 26.34% in 2025, indicating efficient cost management. The net profit margin remains strong at 16.39% in 2025, reflecting robust profitability. EBIT and EBITDA margins are also impressive at 21.48% and 26.28% respectively, underscoring operational efficiency. However, a slight decline in gross profit and net income compared to 2024 suggests a need for careful monitoring of cost structures.
Balance Sheet
85
Very Positive
Infosys maintains a solid balance sheet with a low debt-to-equity ratio of 0.09 in 2025, indicating prudent leverage management. The equity ratio is strong at 64.37%, highlighting substantial equity financing. Return on equity (ROE) is stable at 28.19%, showcasing effective utilization of shareholder funds to generate profits. The company's strong cash position further enhances financial stability. However, the slight increase in total liabilities from 2024 to 2025 warrants attention.
Cash Flow
92
Very Positive
Infosys exhibits impressive cash flow management, with a significant growth in free cash flow from $2.88B in 2024 to $4.20B in 2025, marking a 45.66% increase. The operating cash flow to net income ratio is strong at 1.41, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is equally robust at 1.33, underscoring the company's ability to generate substantial free cash flow. These metrics reflect Infosys' strong cash flow management and liquidity position.
BreakdownDec 2025Dec 2024Dec 2023Dec 2022Dec 2021
Income Statement
Total Revenue19.28B18.56B18.21B16.31B13.56B
Gross Profit5.87B5.47B5.50B5.32B4.73B
EBITDA5.07B4.97B4.71B4.53B4.05B
Net Income3.16B3.17B2.98B2.96B2.61B
Balance Sheet
Total Assets17.42B16.52B15.31B15.55B14.82B
Cash, Cash Equivalents and Short-Term Investments4.67B3.43B2.32B3.47B3.75B
Total Debt962.53M1.00B1.01B722.00M728.00M
Total Liabilities6.17B5.92B6.09B5.56B4.32B
Stockholders Equity11.21B10.56B9.17B9.94B10.44B
Cash Flow
Free Cash Flow4.20B2.88B2.53B3.06B2.97B
Operating Cash Flow4.46B3.15B2.85B3.35B3.26B
Investing Cash Flow-471.45M-708.00M-218.00M-1.00B-1.13B
Financing Cash Flow-2.86B-2.12B-3.29B-3.33B-1.32B

Infosys Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price17.01
Price Trends
50DMA
17.71
Negative
100DMA
17.62
Negative
200DMA
19.41
Negative
Market Momentum
MACD
-0.34
Negative
RSI
51.67
Neutral
STOCH
80.93
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INFY, the sentiment is Neutral. The current price of 17.01 is above the 20-day moving average (MA) of 16.58, below the 50-day MA of 17.71, and below the 200-day MA of 19.41, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 51.67 is Neutral, neither overbought nor oversold. The STOCH value of 80.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for INFY.

Infosys Risk Analysis

Infosys disclosed 58 risk factors in its most recent earnings report. Infosys reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Infosys Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$68.73B21.4730.46%2.99%4.52%-0.22%
74
Outperform
$34.61B14.3916.69%1.74%6.34%12.16%
73
Outperform
$29.72B20.7116.50%2.96%-1.95%62.75%
70
Outperform
$155.17B19.8327.27%2.32%6.21%14.87%
70
Outperform
$223.05B38.8422.73%2.76%2.69%-31.73%
61
Neutral
$35.38B6.84-10.99%1.97%8.74%-8.28%
58
Neutral
$36.22B259.571.01%2.18%3.64%102.21%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
INFY
Infosys
17.01
-4.85
-22.19%
ACN
Accenture
253.99
-70.61
-21.75%
CTSH
Cognizant
70.49
-4.60
-6.13%
FIS
Fidelity National Info
69.76
-7.45
-9.65%
IBM
International Business Machines
239.40
48.82
25.62%
WIT
Wipro
2.79
-0.17
-5.74%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025