TCS surges 12% in five sessions as IT stocks roar back after Q1 reset

India’s largest IT services and consulting firm, Tata Consultancy Services (TCS), shares surged 12% in the last five sessions as investors focus on better-than-expected financial performance of IT stocks, artificial intelligence (AI) transformation, large deals, and revenue gains despite a prior weaker outlook in Q1 earnings.

NSE data collected on Wednesday, July 29, showed that TCS shares have rallied 12% in the last five market sessions and were up 17% in the last one-month period as investors powered the buying momentum in Indian IT stocks.

Similar to TCS, other Indian IT sector stocks like Infosys gained nearly 10%, HCL Tech gained around 9%, and Wipro was up 6% in the last five market sessions on the stock exchange after the Q1 turnaround move.

Experts predict that revenue conversion, AI run-rate growing faster than total revenue, margin behaviour, and Indian rupee movement are among key things in focus for the sector on which investors should keep a close watch.

How did TCS perform in Q1 earnings?

On July 9, TCS posted a 5% growth in net profits to ₹13,349 crore in the April to June quarter of the financial year 2026-27, in comparison to ₹12,760 crore in the same period a year earlier, according to an exchange filing.

The company’s revenue from core operations advanced 14% to ₹72,275 crore in the first quarter, from ₹63,437 crore in the same period a year earlier.

Tata Consultancy Services earned $2.6 billion in revenue from AI-related services in the June quarter, which marked a 14% sequential rise from its levels in the fourth quarter of FY26.

The IT firm’s operating margins were at 24%, while the net margin was at 19.2% as of the end of the June quarter.

The company’s management attributed the Q1 growth to the momentum and the strength of TCS’s strategic positioning, despite geopolitical and macroeconomic headwinds in the market.

Key factors behind TCS’s rally

TCS share price rally was largely fuelled by the company’s better-than-expected financial results, deal book doing the heavy lifting, AI-led transformation mandates, and the company’s annualised AI revenue run-rate reaching $2.6 billion.

“The rally is a repricing of despair meeting genuinely better news. The Q1 print on July 9 landed better than feared,” said Harshal Dasani, Business Head of INVAsset PMS.

Dasani explained that the most underappreciated number was TCS's annualised AI revenue run-rate reaching $2.6 billion, up 13.6% sequentially, the first hard evidence of AI converting into revenue rather than commentary.

Along with the fundamental factors, TCS shares and other IT sector companies also rallied due to easing investors' concerns looming over the slowdown of discretionary technology sector spending post Q1 show.

Latest updates

Latest NSE filings showed that a TCS study revealed that manufacturers are increasing their artificial intelligence (AI) investments as the focus is shifting from standalone automation projects to larger physical AI ecosystems.

“Enterprises are preparing to scale physical AI across factories, warehouses, logistics networks, maintenance operations, and quality management environments,” as per the TCS Physical AI Readiness Report 2026.

On July 16, TCS announced that the company has launched the Consumer Business Group (CBG) Gemini Experience Centre (GEC) in Kolkata, India, marking the third centre in the country after one in Chennai and another in Bengaluru.

“By the end of 2026, TCS plans to establish a total of 10 GECs globally, including four in India,” the company said.

The company also launched the TCS Autonomous Engineering Lab Powered by NVIDIA at its Global Axis campus in Bengaluru on July 15, which seeks to help enterprises move from pilots to production-scale deployment to design, test and validate Industrial AI solutions.

Nifty IT up 9.5% in 5 days

The sectoral benchmark index, Nifty IT, surged over 3% to its intraday high of 31,352.80 points on Wednesday’s market, compared to 30,418.35 points at the previous equity market close, as per the exchange data.

NSE data showed that Nifty IT has gained 9.5% in the last five sessions and has delivered more than 15% gains on a one-month basis due to the renewed and heightened investor interest after the financial results earlier this month.

The exchange data further showed that the Nifty IT has surpassed the benchmark NIFTY50 in terms of gains in the last three months.

Global momentum factors

Global momentum factors like the US Big Tech earnings raised the AI capital spending commentary from major firms, which marks major support for Indian IT companies as they cater to clients in the United States.

The latest earnings report from Coforge also supported the Indian IT sector momentum, resulting in the best performance delivery in two years in the month of July.

“The US Big Tech earnings week has raised expectations that AI capital spending commentary from Microsoft, Meta, Amazon, and Apple stays expansive, which markets read as eventual downstream work for Indian vendors,” said Harshal Dasani.

This momentum also pushed global IT services and consultancy companies like Cognizant up 13%, SAP up 17%, Accenture up 15%, Capgemini up 13, and IBM up nearly 10% in the last five trading sessions on Wall Street.

Dasani also explained that the massive selloff of AI stocks in South Korea and Taiwan resulted in pushing investments towards Indian IT stocks.

“Within emerging markets, the selloff in Korea and Taiwan as the AI-chip trade unwinds is pushing allocators toward India's services-based technology exposure, which trades on a different cycle than silicon,” said Harshal Dasani.

Key things investors should watch

Looking ahead, analysts predict that Tata Consultancy Services’ revenue conversion, AI pricing, and AI run-rate growth are among the key metrics to track, which will potentially decide whether this rally matures or fades.

“The stance stays selective rather than sector-wide until the large-cap prints answer the growth question,” said Dasani.