TCS shares gain 3% ahead of Q2 results: What could turn around the stock after a 34% fall in 2026?

Shares of Tata Consultancy Services (TCS), the IT bellwether, were trading higher in early trade on Thursday, October 8, ahead of the company’s September quarter (Q2 FY27) results, which are due after market hours.

The stock jumped as much as 2.75% to hit a high of ₹2,137.70 on the NSE.

TCS is kicking off the September-quarter earnings season for India’s major IT companies, with investors closely watching deal wins, AI-led revenue growth, margins, and management commentary on the demand environment and the outlook for the second half of FY27.

The earnings will be closely watched as the stock has plunged 34% so far in 2026 (YTD), amid concerns over the pace of growth, cautious client spending and uncertainty over how quickly the company can convert the growing AI opportunity into meaningful revenue.

While TCS has been expanding its AI capabilities and building a sizeable AI services business, investors are looking for clearer evidence that AI-led demand is translating into incremental revenue growth and offsetting weakness in traditional IT spending.

The company’s ability to win and ramp up large deals, sustain margins and provide greater visibility on discretionary technology spending will therefore be key factors to watch.

Against this backdrop, the key question for investors is whether the Q2 results and management commentary can provide a clearer picture of the factors that could help revive sentiment towards the stock after its sharp decline this year.

What could turn around the stock after a 34% fall in 2026?

A recovery in TCS shares will depend on signs of improvement in growth and demand, alongside the company’s ability to convert its strong deal pipeline into revenue. TCS entered Q2 FY27 with total contract value (TCV) of $9.5 billion and annualised AI services revenue of $2.6 billion in Q1 FY27. It also secured large AI-led transformation deals, including an $800 million contract with SKF.

The key focus, therefore, will be on the pace at which these large deals translate into revenue, the growth of AI-led services, and management’s commentary on client spending, particularly discretionary technology budgets. Margins will also remain important as the company navigates pricing pressure and investments in AI capabilities.

For the stock to regain investor confidence, the focus will be on evidence of stronger revenue growth, healthy deal conversion, sustained margins, and greater visibility on the demand recovery rather than AI-related announcements alone.

TCS-Porsche deal

In August 2026, the IT services major announced a strategic partnership with Porsche AG for enabling AI services across the mobility value chain for Porsche. The partnership is reinforced by a five-year strategic deal from Porsche.

As part of the deal, TCS will establish a dedicated AI Mobility Centre of Excellence for Porsche to drive innovation across manufacturing, engineering, operations and customer experience.

“TCS, through its subsidiary, will acquire 100% of MHP Management- und IT-Beratung GmbH (MHP), Porsche’s Germany-based management and IT consulting subsidiary. The proposed partnership and acquisition remain subject to regulatory approvals,” the press release added.