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Infosys (INFY) Secures $2B AI Contract From an Existing Client
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Infosys Limited (INFY - Free Report) revealed on Monday that it has signed a framework agreement with one of its existing clients to provide artificial intelligence (AI) and automation services.
Though India’s second-largest software exporter didn’t disclose the name of the client, it did reveal that the client’s target spend is estimated at around $2 billion over the next five years. In an exchange filing, Infosys said that the agreement includes AI and automation-led development, modernization and maintenance services.
The news came days ahead of the company’s scheduled first-quarter fiscal 2024 financial results announcement on Jul 20. The Zacks Consensus Estimate for Infosys’ first-quarter revenues is pegged at $4.55 billion, suggesting a year-over-year improvement of 2.4%. The consensus mark, pegged at 18 cents per share, for first-quarter non-GAAP earnings implies year-over-year growth of 12.5%.
Shares of Infosys have been among those that have lagged this year’s tech rally. With a year-to-date (YTD) decline of 4%, INFY stock has underperformed the tech-laden Nasdaq Composite index’s rise of 26.1%. It has also underperformed the Technology Select Sector SPDR (XLK - Free Report) , the most important component of the technology sector broad market index, which has returned 43.2% YTD.
The dismal YTD stock performance can be primarily attributed to softening IT spendings on recession concerns, inflationary pressure and higher interest rates, which are hurting the demand for Infosys’ solutions and services. Additionally, lower-than-expected fourth-quarter fiscal 2023 results also turned investors cautious about this Zacks Rank #4 (Sell) company’s near-term prospects.
Infosys has been ramping up its AI offerings as the success of OpenAI’s ChatGPT has demonstrated the AI technology’s potential to improve operations in almost every industry. Though AI has been around for years, the meteoric rise of OpenAI’s ChatGPT has captivated the world’s attention on the power of generative AI to augment human capability, suggesting that the AI boom may just get started.
Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data.
Infosys forayed into the generative AI space with the launch of Topaz services in May 2023. Topaz is an AI-first set of services, solutions and platforms using generative AI technologies. The product suite helps amplify the potential of humans, enterprises and communities to tap the next generation of opportunities.
The recently signed $2 billion worth framework agreement depicts that Infosys’ AI offerings are capable of drawing large contracts, which will substantially boost the company’s revenues over the long run. INFY’s contract wins and large deals contracted in the fourth quarter of fiscal 2023 compared to the third quarter.
The company added 115 clients and signed large deals of contract value worth $2.1 billion in the fourth quarter. Meanwhile, it added 134 clients and signed large deals worth $3.3 billion in the third quarter.
Growing Competition in the Generative AI Space
The deal will provide a motivational boost to Infosys against its India-based rivals, Tata Consultancy Services (TCS) and Wipro Limited (WIT - Free Report) , which are also aggressively investing in enhancing their AI capabilities.
Earlier this month, TCS announced that it would train 25,000 engineers on generative AI tools and services to get them certified on Microsoft’s (MSFT - Free Report) Azure OpenAI. The company will provide its generative AI services on Microsoft’s Azure Cloud platform.
Additionally, TCS launched a generative AI business offering – TCS Generative AI Enterprise Adoption. Under this service, the company will offer deployments of OpenAI’s generative AI business tools via Microsoft’s Azure cloud platform to businesses. The company launched similar generative AI business offerings based on Google’s cloud platform in May 2023.
Infosys’ another major competitor, Wipro, announced last week that it would invest around $1 billion in the AI space over the next three years. The investment would also include training its entire staff of 250,000 people across 66 countries to know how to use AI.
Image: Bigstock
Infosys (INFY) Secures $2B AI Contract From an Existing Client
Infosys Limited (INFY - Free Report) revealed on Monday that it has signed a framework agreement with one of its existing clients to provide artificial intelligence (AI) and automation services.
Though India’s second-largest software exporter didn’t disclose the name of the client, it did reveal that the client’s target spend is estimated at around $2 billion over the next five years. In an exchange filing, Infosys said that the agreement includes AI and automation-led development, modernization and maintenance services.
The news came days ahead of the company’s scheduled first-quarter fiscal 2024 financial results announcement on Jul 20. The Zacks Consensus Estimate for Infosys’ first-quarter revenues is pegged at $4.55 billion, suggesting a year-over-year improvement of 2.4%. The consensus mark, pegged at 18 cents per share, for first-quarter non-GAAP earnings implies year-over-year growth of 12.5%.
Shares of Infosys have been among those that have lagged this year’s tech rally. With a year-to-date (YTD) decline of 4%, INFY stock has underperformed the tech-laden Nasdaq Composite index’s rise of 26.1%. It has also underperformed the Technology Select Sector SPDR (XLK - Free Report) , the most important component of the technology sector broad market index, which has returned 43.2% YTD.
The dismal YTD stock performance can be primarily attributed to softening IT spendings on recession concerns, inflationary pressure and higher interest rates, which are hurting the demand for Infosys’ solutions and services. Additionally, lower-than-expected fourth-quarter fiscal 2023 results also turned investors cautious about this Zacks Rank #4 (Sell) company’s near-term prospects.
Infosys Limited Price and Consensus
Infosys Limited price-consensus-chart | Infosys Limited Quote
Infosys Banks on AI Opportunities
Infosys has been ramping up its AI offerings as the success of OpenAI’s ChatGPT has demonstrated the AI technology’s potential to improve operations in almost every industry. Though AI has been around for years, the meteoric rise of OpenAI’s ChatGPT has captivated the world’s attention on the power of generative AI to augment human capability, suggesting that the AI boom may just get started.
Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data.
Infosys forayed into the generative AI space with the launch of Topaz services in May 2023. Topaz is an AI-first set of services, solutions and platforms using generative AI technologies. The product suite helps amplify the potential of humans, enterprises and communities to tap the next generation of opportunities.
The recently signed $2 billion worth framework agreement depicts that Infosys’ AI offerings are capable of drawing large contracts, which will substantially boost the company’s revenues over the long run. INFY’s contract wins and large deals contracted in the fourth quarter of fiscal 2023 compared to the third quarter.
The company added 115 clients and signed large deals of contract value worth $2.1 billion in the fourth quarter. Meanwhile, it added 134 clients and signed large deals worth $3.3 billion in the third quarter.
Growing Competition in the Generative AI Space
The deal will provide a motivational boost to Infosys against its India-based rivals, Tata Consultancy Services (TCS) and Wipro Limited (WIT - Free Report) , which are also aggressively investing in enhancing their AI capabilities.
Earlier this month, TCS announced that it would train 25,000 engineers on generative AI tools and services to get them certified on Microsoft’s (MSFT - Free Report) Azure OpenAI. The company will provide its generative AI services on Microsoft’s Azure Cloud platform.
Additionally, TCS launched a generative AI business offering – TCS Generative AI Enterprise Adoption. Under this service, the company will offer deployments of OpenAI’s generative AI business tools via Microsoft’s Azure cloud platform to businesses. The company launched similar generative AI business offerings based on Google’s cloud platform in May 2023.
Infosys’ another major competitor, Wipro, announced last week that it would invest around $1 billion in the AI space over the next three years. The investment would also include training its entire staff of 250,000 people across 66 countries to know how to use AI.
Currently, Wipro and Microsoft each carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.