Archive · 18 Dec 2025
IT Stocks Poised for Gains Amid AI Growth
Motilal Oswal Financial Services (MOFSL) thinks the IT services sector is near a cyclical bottom and could see big gains soon.
They believe that artificial intelligence (AI) services are starting to grow, even though traditional demand is still weak.
MOFSL's top picks for investments are HCL Technologies, Tech Mahindra, Hexaware Technologies, and Coforge.
They expect AI demand to pick up in 2026 and for the industry to grow more in FY28.
MOFSL also thinks that while some revenues might decrease due to AI, new AI services will make up for it.
They have raised their growth expectations and think current stock prices already account for a pessimistic view, so any AI-led recovery could lead to big gains.
Motilal Oswal Financial Services (MOFSL) believes the IT services sector is nearing a cyclical bottom with upside risks.
Top picks for the next AI cycle include HCL Technologies, Tech Mahindra, Hexaware Technologies, and Coforge.
AI services demand is expected to inflect in calendar year 2026, with revenue recovery beginning in the second half of FY27.
MOFSL estimates 10–12% of sector revenues could face deflationary pressure over three to four years, offset by new AI-led services.
Current valuations already discount a pessimistic scenario, with any AI-led recovery potentially driving outsized gains.
- Who
- Motilal Oswal Financial Services (MOFSL)
- What
- IT stocks poised for gains due to AI growth
- When
- Expected AI demand inflection in 2026, revenue recovery in second half of FY27
- Where
- IT services sector
- Why
- AI services demand and partnerships with system integrators
- Brokerage Firm
- Motilal Oswal Financial Services (MOFSL)
- Sector
- IT Services
- Top Picks
- HCL Technologies, Tech Mahindra, Hexaware Technologies, Coforge
- Expected AI Demand Inflection
- Calendar Year 2026
- Revenue Recovery Timing
- Second Half of FY27
- Industry Growth Acceleration
- FY28
- Estimated Revenue Deflation
- 10–12% over 3–4 years
- Valuation Multiple Increase
- 20%
