TCS shares in bear grip; can an AI-first pivot revive the stock? Target prices
Nomura India retained its 'Neutral' rating on the stock with an unchanged target of Rs 3,300. It called Infosys as its preferred large-cap pick in the Indian IT space.
- Dec 18, 2025,
- Updated Dec 18, 2025 9:11 AM IST
At its analyst meet, Tata Consultancy Services (TCS) outlined its strategic shift from a digital-first services provider to a full-stack, AI-led technology services leader. While TCS has historically lagged global peers such as Accenture in AI investments and positioning, effective execution of this strategy could help narrow the gap, said brokerages, as they retained their neutral-to-positive calls on the stock.
In a bear grip, the IT stock lost Rs 3,18,247 crore or 21 per cent of its market value in the challenging 2025 that saw the BSE IT index falling 15 per cent during the same period. The TCS stock currently trades at a forward PE of 22 times, which is at 10 per cent discount to the Nifty IT index against a peak premium of 30 per cent in April 2020.
Nomura India retained its 'Neutral' rating on the stock with an unchanged target of Rs 3,300. It called Infosys as its preferred large-cap pick in the Indian IT space.
"While macroeconomic conditions remain uncertain, deal booking is improving. Data center bet should improve the medium to long term growth outlook; however, its significant capex requirement should keep the stock volatile in the near term," Antique Stock Broking said as it maintained 'Buy' rating with an unchanged target price of Rs 3,575.
TCS said its focus is on a shift from digital services to AI-centric enterprise transformation. It came out with a five-pillar strategy for AI execution framework. It maintained margin aspiration of 26–28 per cent and retained shareholder return commitment of 80–100 per cent free cash flow (FCF). It sees $1.5 billion in annualised AI revenue.
"Given enterprise tech debt is still high and cloud adoption is yet to reach saturation levels, the opportunity for AI-driven modernisation remains significant. We remain positive on TCS and expect it to be one of the biggest beneficiaries of the recovery in tech spends. Maintain ‘Buy’ with an unchanged target of Rs 3,650," Nuvama said.
MOFSL said it was encouraged by TCS’s changed stance on M&A, following its recent acquisitions (Listengage, Coastal), but slightly disappointed when it reaffirmed its (slightly lofty) 26-28 per cent EBIT margin ambition, which it said could leave money on the table at this stage of the cycle. This brokerage suggested a target of Rs 4,000 on the stock.
At its analyst meet, Tata Consultancy Services (TCS) outlined its strategic shift from a digital-first services provider to a full-stack, AI-led technology services leader. While TCS has historically lagged global peers such as Accenture in AI investments and positioning, effective execution of this strategy could help narrow the gap, said brokerages, as they retained their neutral-to-positive calls on the stock.
In a bear grip, the IT stock lost Rs 3,18,247 crore or 21 per cent of its market value in the challenging 2025 that saw the BSE IT index falling 15 per cent during the same period. The TCS stock currently trades at a forward PE of 22 times, which is at 10 per cent discount to the Nifty IT index against a peak premium of 30 per cent in April 2020.
Nomura India retained its 'Neutral' rating on the stock with an unchanged target of Rs 3,300. It called Infosys as its preferred large-cap pick in the Indian IT space.
"While macroeconomic conditions remain uncertain, deal booking is improving. Data center bet should improve the medium to long term growth outlook; however, its significant capex requirement should keep the stock volatile in the near term," Antique Stock Broking said as it maintained 'Buy' rating with an unchanged target price of Rs 3,575.
TCS said its focus is on a shift from digital services to AI-centric enterprise transformation. It came out with a five-pillar strategy for AI execution framework. It maintained margin aspiration of 26–28 per cent and retained shareholder return commitment of 80–100 per cent free cash flow (FCF). It sees $1.5 billion in annualised AI revenue.
"Given enterprise tech debt is still high and cloud adoption is yet to reach saturation levels, the opportunity for AI-driven modernisation remains significant. We remain positive on TCS and expect it to be one of the biggest beneficiaries of the recovery in tech spends. Maintain ‘Buy’ with an unchanged target of Rs 3,650," Nuvama said.
MOFSL said it was encouraged by TCS’s changed stance on M&A, following its recent acquisitions (Listengage, Coastal), but slightly disappointed when it reaffirmed its (slightly lofty) 26-28 per cent EBIT margin ambition, which it said could leave money on the table at this stage of the cycle. This brokerage suggested a target of Rs 4,000 on the stock.