TCS share price target: Nomura retains 'Buy' after management meet, says this
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- ✓Nomura retained a 'Buy' rating on TCS shares after a recent management meeting.
- ✓The firm said TCS invests $1 billion annually in AI, which now accounts for 10 per cent of total revenue.
- ✓While traditional services face deflation, management expects growth to accelerate as new AI revenue streams gain momentum.
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Nomura said its meeting focused on the growing contribution from artificial intelligence, enterprise readiness, deflation in traditional services and medium- to long-term growth opportunities.
It said TCS is investing about $1 billion annually in AI training, hiring and infrastructure, with the management expecting the impact of deflation to ease and net new AI revenue to accelerate.
The TCS management said annualised AI revenue stood at $3.1 billion, accounting for about 10 per cent of total revenue. AI revenue has grown at a compound quarterly rate of about 15-20 per cent over the past four quarters, Nomura said.
However, only 5 per cent of enterprises are mature enough to use frontier AI at scale. The remaining 95 per cent face constraints such as inadequate data quality and readiness, a lack of integrated infrastructure, and insufficient fine-tuned, AI-ready applications, Nomura noted.
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