Infosys and Wipro American Depositary Receipts (ADRs) rose sharply in premarket US trading after Accenture projected annual revenue growth exceeding analyst expectations. The positive forecast alleviated fears of weakening global IT demand and provided a boost to Indian IT stocks reliant on US and European clients.
- Infosys ADRs jumped about 8% and Wipro ADRs gained 3% after Accenture's forecast.
- Accenture expects 3-6% revenue growth, surpassing analyst estimates with $18.68 billion Q4 revenue.
- Positive sentiment offsets concerns over slowing discretionary IT spending and AI impact.
What happened
Accenture reported fourth-quarter revenue of $18.68 billion, beating analyst estimates of $18.03 billion. The company forecasted annual revenue growth of 3-6%, signaling stronger-than-expected demand in consulting, managed services, and artificial intelligence projects. This optimism was reflected in a more than 7% rise of Accenture shares in premarket US trading.
Following Accenture's positive outlook, Infosys ADRs rose nearly 8% and Wipro ADRs increased about 3% in premarket trading. The gains in these Indian IT giants' US-traded shares came as investors reassessed the sector’s health amid concerns about global discretionary technology spending and the potential disruptiveness of AI on traditional software services.
Why it matters
Accenture is widely viewed as a benchmark for global technology services demand. Its encouraging revenue forecast suggests continuing client appetite for consulting and managed services, which provides confidence to Indian IT exporters whose revenues depend significantly on US and European markets.
Indian IT companies have faced a challenging year with reduced discretionary spending and investor uncertainty over AI's impact. Accenture’s results ease some of these worries and have contributed to a rebound in Indian IT shares nationally, even as broader market indices declined. The improved sentiment has provided a cushion against expectations of weak earnings reported for the September quarter.
What to watch next
Investors and analysts will closely monitor upcoming quarterly earnings reports from major Indian IT firms like Infosys, Wipro, TCS, and HCL Technologies to gauge if the positive trend forecast by Accenture translates into stronger financial performance amid pricing pressures and cautious client budgets.
The trajectory of AI adoption and its influence on service pricing and demand remains a key factor to watch. While AI-related work has buoyed sentiment so far, its longer-term impact on the volume and nature of traditional IT services could reshape growth prospects for Indian exporters.