TCS vs Infosys: Which Stock Looks Better Before Q3 Earnings?

Prior to the Q3 results, two of the biggest heavyweights of Indian IT services are under scrutiny. Both businesses have recently made headlines.

While Tata Consultancy Services (TCS) is investing an enormous $6.5 billion on physical AI infrastructure, Infosys has chosen to do one of the biggest buybacks in the industry, returning Rs 18,000 crore. While Infosys concentrates on capital efficiency and recovering excess cash, TCS is using an asset-heavy approach to govern the core components of AI.

TCS vs Infosys Q3 earnings: Strategic divergence before results

Prior to the Q3 results, which are coming next week, here is a comparison of the two firms’ revenue projections, order pipeline, and AI emphasis.

The strategic gap between TCS and Infosys

TCS made the most significant statement of the quarter. The business said that it will establish a subsidiary to construct up to one gigawatt of AI data center capacity over a period of five to seven years, with an estimated $6.5 billion in total investment.

During the results call, CEO K Krithivasan said, “TCS will become the world’s biggest AI-led technology services firm,” positioning the change as essential to the company’s long-term goals. The choice deviates from the asset-light services paradigm that has characterized Indian IT for many years.

According to Krithivasan, each 150 megawatt block would need around $1 billion in funding, which would come from a combination of loans, equity, and financial partners.

Infosys adopted a very different approach. The business authorized a share repurchase of Rs 18,000 crore, or around 2.41% of its outstanding stock, at a price of Rs 1,800 per share. An interim dividend of Rs 23 per share accompanied the action.

Instead of portraying the decision as a reactive move, management presented it as an extension of their capital-allocation system. Without investing in greenfield infrastructure, the business has also persisted in pursuing targeted acquisitions, such as the upcoming acquisition of 75% of Versent Group from Telstra.

TCS, Infosys share price outlook vs Nifty 50

 

Deal momentum between TCS and Infosys

The variation in engagement profiles is seen in deal data. Due in significant part to a multi-year agreement with Tryg Insurance, TCS reported total contract value (TCV) of $10 billion in Q2 FY26, up 16% year over year. $3.2 billion of this TCV came from BFSI alone.

TCS CEO Krithivasan said, “Our deal pipeline continues to show good momentum with a healthy mix of cost optimisation and transformation transactions.” He also stated that FY26 international revenue growth is anticipated to outpace FY25’s constant-currency growth of 70 basis points.

Infosys reported $3.1 billion in large-deal TCV, of which 67% was net new. The business emphasized long-term partnerships like its many Finacle banking platform deployments and its ten-year strategic partnership with HanesBrands. Infosys limits direct comparison by not disclosing total TCV in the same manner as TCS.

Infosys vs TCS: Q2FY26 results

 

It does not include a one-time workforce reorganization expense of Rs 1,135 crore that Tata Consultancy Services incurred in Q2 FY26.

TCS’s margin advantage versus Infosys is at 420 basis points. During the results call, CFO Samir Seksaria said, “Our industry-leading margins provide us the capacity to absorb market changes and competitive challenges.”

On sales growth, however, Infosys surpassed TCS. Even if overall sector demand is still cautious, its 8.6% year-over-year growth indicates a quicker conversion of transaction pipelines into billable work during the quarter.

AI services: What is quantifiable, what isn’t

TCS has started providing specific information on AI monetization. With more than 5,000 AI engagements and 180,000 people educated in advanced AI capabilities, the business said on its December 17, 2025, analyst day that it had attained annualized AI services revenue of around $1.5 billion, or 3.8% of its revenue run rate.

Infosys’s quarterly reports did not provide a comparable AI revenue statistic. The management has positioned AI as integrated into transformation programs rather than as a stand-alone source of income, even though it still markets its AI products under the Topaz brand.

Restructuring the workforce: TCS vs Infosys

During the quarter, both businesses had to pay for restructuring.

 

Sudeep Kunnumal, TCS’s CHRO, said, “We have released roughly 1% of our workers, predominantly mid and senior level, with skill and capacity mismatch,” pointing out that severance conditions exceeded industry standards.

Infosys did not reveal specific personnel moves, although it did acknowledge restructuring costs in its financials.

Infosys vs TCS: Market access and geography

For Q2 FY26, TCS reported a 0.6% quarter-over-quarter increase in foreign revenue in constant currency. Of its $10 billion TCV, $4.3 billion came from North America, while developing markets like India were growing one after the other.

With 96.9% of its income coming from foreign markets, Infosys is still largely reliant on exports, as it was a year ago. Due to this concentration, business expenditure cycles in North America and Europe have a significant impact on performance.

TCS said that it has greatly localized its personnel in terms of visa exposure. According to Kunnumal, “only around 500 colleagues have traveled to the US on H-1B this fiscal year.” In its safe-harbor statement, Infosys identified immigration policy as a risk factor, but it did not provide current localization statistics.

TCS vs Infosys for brokerage advice

Although there is little room for further margin growth between FY26 and FY28, Jefferies anticipates that TCS will gain from workforce reorganization in FY26. According to Jefferies, TCS is putting growth ahead of profit margins, which may limit upside-to-return ratios. This includes scaling up acquisitions like Coastal Cloud to develop skills. Jefferies predicts a 5% year-over-year constant-currency revenue CAGR for Infosys during FY26–FY28, which is the highest among major Indian IT companies and emphasizes the company’s standing as a top AI partner for a number of major international banks.

With the help of operational leverage and restructuring advantages, HDFC Securities anticipates that TCS will continue to maintain its operating margin range of 26–28%. It also notes a $8–10 billion GenAI contract pipeline. HDFC Securities anticipates that Infosys will maintain its margin range of 20–22% while raising its FY26 revenue growth forecast by around 100 basis points to 3–4% constant currency.

Kotak Institutional Equities anticipates that investors will continue to concentrate on TCS’s efforts to boost revenue growth in developed countries and on the implementation of its planned data-center expansions. Kotak anticipates that Infosys would have greater medium-term growth visibility in comparison to its competition via increased transaction conversion and operational efficiency.

In light of the effects of the pay raise, Nuvama anticipates that TCS would concentrate on revenue recovery and margin stability. Nuvama anticipates that Infosys will continue to meet its FY26 targets of 20–22% operating margins and 2-3% constant-currency revenue growth, bolstered by deal momentum and efficiency measures.

Target prices for TCS and Infosys

 

Even at the expense of increased capital intensity and lower short-term profits, TCS is making a long-term wager that ownership over AI infrastructure will strengthen client relationships and drive higher-value transformation work. Prioritizing capital efficiency, Infosys continues to expand via services, platforms, and strategic acquisitions while returning excess cash through buybacks and dividends.

Strong balance sheets support both tactics. The value multiples of both businesses are comparable. The differences are not in quarterly performance, but rather in how each company is allocating funds as the need for AI grows.

Frequently asked questions

Q1. Is TCS or Infosys more suited for AI-driven expansion?

TCS’s strong investment in AI data-center infrastructure and quantified AI revenue disclosures seem to put it in a better position for long-term AI-led development. Instead than pursuing asset-heavy infrastructure, Infosys is integrating AI into current transformation agreements.

Q2. Does Infosys’ repurchase suggest that there are not many prospects for expansion?

Not always. Strong cash production and capital discipline are evident in Infosys’ Rs 18,000-crore repurchase. The business keeps making investments in big agreements and well chosen acquisitions while giving shareholders their money back.

Q3. Ahead of Q3 reports, which firm has more transaction momentum?

With $10 billion TCV in Q2 FY26, TCS leads in absolute deal size, while Infosys demonstrates superior conversion efficiency with faster year-over-year revenue growth and a high percentage of net-new transactions.

Q4. How do TCS and Infosys’ margins compare?

TCS continues to operate around 420 basis points higher than Infosys, maintaining a sizable margin lead. On the other hand, Infosys has been maintaining its advised margin range while increasing operational efficiency.

Q5. What stock is less vulnerable to international concerns like location and visas?

Through workforce localization, TCS has decreased its reliance on visas, reducing its sensitivity to changes in immigration laws. With over 97% of its income coming from outside markets, Infosys is still more reliant on exports.

In conclusion

In India’s IT services market, TCS and Infosys are two different yet reliable options. Even if it puts pressure on short-term profitability, TCS is making a risky, expensive bet on controlling AI infrastructure to ensure long-term strategic advantage. In contrast, Infosys places a higher priority on capital efficiency, shareholder returns, and disciplined expansion via platforms and services.

Investor preference—long-term ownership of AI infrastructure with TCS vs capital-efficient execution and quicker contract conversion with Infosys—will play a bigger role in the decision between the two before Q3 results. With excellent balance sheets and similar values, both are still fundamentally sound.

Disclaimer

This is not financial advice; it is only informative. Investments in the market are risky. Before making an investment, please speak with a financial adviser.