TCS Shares Rise 3.85% as AI Investments Support Margins

Shares of Tata Consultancy Services (TCS) rose 3.85% on Friday, marking their biggest percentage gain in six weeks after the Indian IT giant reported stable operating margins despite increasing investments in artificial intelligence. The stock’s gains helped lift India’s Nifty IT index by 3.02%, as investors welcomed signs that the company could maintain profitability amid weak demand.

TCS reported an operating margin of 24%, unchanged from the previous quarter. Its annualised AI revenue increased nearly 20% quarter-on-quarter to $3.1 billion, highlighting growing demand for AI-related services. Analysts said stable margins were encouraging as artificial intelligence puts pressure on traditional IT billing models by reducing the time needed to complete tasks, potentially lowering service prices.

Despite the positive market reaction, concerns remain over a prolonged slowdown in demand, particularly among consumer-focused clients. India’s $315 billion IT sector is adapting to AI-driven disruption while investing in new technology-based services to support growth. TCS also said it expects little impact from the US suspension of the Permanent Labor Certification programme, which affects a key pathway to permanent residency for foreign workers.

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