TCS Q3 Revenue Tops Estimates on AI Demand, North America Returns to Growth

Tata Consultancy Services (TCS) reported a marginally better-than-expected third-quarter revenue on Monday, supported by rising AI-led technology spending and a recovery in key markets. Consolidated revenue rose 4.9% year-on-year to ₹670.87 billion for the quarter ended December 31, beating analysts’ estimate of ₹666.76 billion, according to LSEG data. The company said demand remained steady despite a seasonally weak period when clients typically reduce operations during the year-end.

The IT major noted that AI services are now generating $1.8 billion in annualised revenue, contributing around 5.8% of overall revenue, underscoring the growing role of AI-driven client projects. Five of its eight geographies recorded growth, led by Middle East Asia with an 8.3% rise and Continental Europe with 3.5%. Importantly, North America—contributing nearly half of TCS’ total revenue—posted growth for the first time since the July-September 2023 quarter, signalling a potential bottoming out of the prolonged demand slowdown.

However, quarterly net profit fell 14% to ₹106.57 billion, missing market expectations of ₹130.24 billion, largely due to one-time restructuring costs linked to layoffs, the impact of India’s new labour codes enacted in November 2025, and other legal expenses. TCS also reported a total order book of $9.3 billion, down from $10.2 billion a year ago, while announcing eight major deals in the quarter, including partnerships with British retailer Morrisons and Denmark’s telecom operator Telenor. The firm declared a dividend of ₹11 per share along with a special dividend of ₹46 per share.

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