Synopsis : Nomura remains bullish on TCS and Wipro, citing Artificial Intelligence, cloud computing, cybersecurity, and digital transformation as key growth drivers despite near-term macroeconomic challenges. The brokerage has maintained 'Buy' ratings on both IT majors, with upside potential of up to 33% from current levels.
Nomura Stays Positive on India’s IT Leaders
India’s information technology sector continues to navigate a challenging demand environment, but brokerage firm Nomura believes the long-term growth story remains intact. The firm has reiterated its positive stance on two of the country's largest IT services companies — Tata Consultancy Services (TCS) and Wipro.
While global economic uncertainty and cautious enterprise spending remain near-term headwinds, Nomura believes emerging opportunities in Artificial Intelligence (AI), cloud migration, cybersecurity, and enterprise modernization could unlock the next phase of growth for both companies.
Nomura's Ratings and Target Prices
Nomura has retained a ‘Buy’ rating on both IT stocks:
- TCS: Target Price of Rs 2,930, implying an upside of nearly 33%
- Wipro: Target Price of Rs 250, indicating an upside potential of around 26%
The brokerage believes both companies are well-positioned to benefit from the increasing adoption of AI-powered business solutions across industries.
Why Nomura Likes TCS
According to Nomura, TCS management recently highlighted several AI-driven growth opportunities during the Nomura Investment Forum Asia 2026.
The company believes enterprises cannot simply deploy AI models independently due to the complexity of existing technology infrastructure. This creates a significant role for IT service providers and system integrators.
Management indicated that AI spending is largely incremental rather than replacing existing technology budgets, opening up fresh revenue streams for service providers.
Key opportunity areas highlighted by TCS include:
- Enterprise AI adoption and integration
- Autonomous business operations
- Data modernization for AI readiness
- Cybersecurity enhancement
- Industry-specific AI applications
- Insurance and healthcare automation
The company also noted that AI investments are expected to generate meaningful revenue opportunities over the medium term.
Near-Term Challenges Persist for TCS
Despite its optimism on AI, TCS acknowledged that demand conditions remain soft in certain markets.
Management highlighted that spending caution triggered by ongoing geopolitical tensions in the Middle East has continued into the current quarter.
The company stated that weakness witnessed during the latter part of Q4FY26 has persisted, impacting decision-making timelines among clients.
However, Nomura believes these challenges are temporary and continues to maintain its positive outlook on the stock.
Wipro Positioning for the AI Transformation Wave
Nomura also remains constructive on Wipro as enterprises gradually move from AI experimentation to full-scale implementation.
According to the brokerage, Wipro sees increasing commercialization of AI platforms developed by companies such as OpenAI and Anthropic as a major catalyst for future services demand.
The company believes enterprises will require technology partners to help deploy, manage, and optimize AI solutions across their operations.
Management noted that AI adoption will increasingly shift towards outcome-based engagement models, potentially changing the traditional relationship between revenue growth and employee headcount growth.
Competition and Margin Pressures Remain Key Risks
While Wipro sees strong opportunities from AI-led spending, management acknowledged that competitive intensity remains elevated across the IT services industry.
Large outsourcing contracts and cost-optimization deals continue to attract aggressive bidding from technology vendors.
Additionally, salary revisions and execution costs related to recently won large deals may create some pressure on margins in the short term.
Despite these challenges, the company expects profitability to remain within a manageable range throughout the year.
AI, Cloud and Cybersecurity Driving the Next Growth Cycle
Nomura believes both TCS and Wipro stand to benefit as global enterprises continue investing in:
- Artificial Intelligence
- Cloud computing
- Cybersecurity
- Data modernization
- Digital transformation initiatives
As businesses accelerate technology adoption to improve efficiency and productivity, IT service providers could emerge as key beneficiaries of the next spending cycle.
Conclusion
Nomura remains optimistic on both TCS and Wipro despite ongoing macroeconomic uncertainties. The brokerage believes that AI-driven transformation, cloud adoption, cybersecurity investments, and digital modernization initiatives will continue creating long-term growth opportunities for India's leading IT services companies. With upside potential of up to 33%, Nomura sees both stocks as attractive plays on the evolving global technology landscape.
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