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TCS Posts Modest Revenue Beat as AI Demand Lifts North America Growth

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Tata Consultancy Services reported a slim third-quarter revenue beat on Monday, driven by artificial intelligence-led demand, with its key North America market returning to growth for the first time in two years.

Consolidated revenue for India’s largest software services firm rose 4.9% year-on-year to 670.87 billion rupees ($7.44 billion) for the quarter ended December 31, slightly above analysts’ estimate of 666.76 billion rupees, according to LSEG data. The traditionally weak December quarter benefited from increased AI spending by clients, with AI services generating about $1.8 billion annually and accounting for roughly 5.8% of total revenue.

Chief Executive K Krithivasan said strong deal momentum and growing leadership in AI underpin the company’s outlook. “Based on the client conversations, strong deal momentum and the leadership we are gaining in AI, we are confident of a good calendar year 2026,” he said during a post-earnings analyst call.

North America, which contributes nearly half of TCS’s revenue, posted growth for the first time since the July–September 2023 quarter, signaling a potential bottoming out of the slowdown. Five of the company’s eight geographic regions recorded growth, led by the Middle East and Africa with an 8.3% increase, followed by Continental Europe at 3.5%.

TCS Campus Siruseri, Chennai - MGS Architecture

Despite these gains, caution persists across India’s $283 billion IT services industry as clients remain wary of non-essential technology spending amid macroeconomic uncertainty in the United States. Analysts cited ongoing concerns around tariffs and proposed $100,000 visa fees as additional headwinds. Ambarish Shah of Systematix said North America’s recovery is likely to be gradual as structural weaknesses continue.

TCS noted that softer performance in banking and financial services and retail was largely due to year-end seasonality, with an expected recovery from the current quarter. The company’s total order book stood at $9.3 billion, down from $10.2 billion a year earlier.

Quarterly net profit fell 14% to 106.57 billion rupees, missing analysts’ expectations of 130.24 billion rupees. The decline was attributed to one-time restructuring costs linked to layoffs, the impact of India’s new labour codes enacted in November 2025, and other legal expenses.

The Mumbai-based firm declared a dividend of 11 rupees per share, along with a special dividend of 46 rupees per share. TCS shares listed in Mumbai closed 1.3% higher ahead of the results.

HCLTech Narrows Annual Revenue Outlook as Deal Momentum Strengthens

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HCLTech narrowed its annual revenue growth forecast on Monday, citing a stronger deal pipeline and a modest beat in quarterly revenue, even as global demand for discretionary technology spending remains muted.

The Indian software services exporter reported a 13.3% year-on-year rise in revenue to 338.72 billion rupees ($3.8 billion) for the quarter ended December 31, exceeding analysts’ average estimate of 330.46 billion rupees, according to LSEG data. New deal bookings during the quarter climbed to $3 billion, prompting HCLTech to revise its full-year revenue growth outlook to a range of 4% to 4.5%, compared with its earlier forecast of 3% to 5%.

Chief Executive C Vijayakumar said client spending is selectively returning in areas that support artificial intelligence adoption, though he cautioned that overall demand is unlikely to rebound to post-pandemic peaks. “While uncertainty persists in the global market leading to slowing growth, the fundamental demand for technology as a driver for business transformation remains structurally intact,” he said during a post-earnings briefing.

Analysts viewed the updated outlook as a positive signal. Jefferies said the revised guidance provides “stronger visibility for growth in FY27,” while Centrum Broking analyst Piyush Pandey noted that the results were encouraging despite the December quarter typically being seasonally weak for IT firms.

India’s $283-billion IT services sector continues to face headwinds from cautious client spending in the United States, where macroeconomic uncertainty and geopolitical tensions have delayed non-essential technology investments. Earlier on Monday, industry leader Tata Consultancy Services also posted revenue slightly above expectations. Peers Infosys, Wipro, and Tech Mahindra are scheduled to report earnings later this week.

HCLTech’s quarterly profit fell 11.2% to 40.76 billion rupees, missing analysts’ forecasts, after the company took a one-time charge of 9.56 billion rupees linked to the impact of India’s new labour codes.

TSMC Fourth-Quarter Revenue Jumps 20%, Beating Market Forecasts

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TSMC, the world’s largest contract chipmaker, reported a 20.45% year-on-year rise in fourth-quarter revenue on Friday, beating market expectations as booming demand for artificial intelligence applications lifted sales.

Revenue for the October–December period reached T$1.046 trillion ($33.11 billion), based on Reuters calculations from the company’s monthly disclosures, up from T$868.46 billion a year earlier. The result topped an LSEG SmartEstimate of T$1.036 trillion and came within the company’s previous guidance range of $32.2 billion to $33.4 billion issued in October.

TSMC has been one of the biggest beneficiaries of the global AI boom, supplying advanced chips to customers such as Nvidia and Apple. Strong AI-related demand has more than offset softer orders for chips used in consumer electronics, where pandemic-driven demand has faded.

The company is scheduled to report full fourth-quarter earnings on January 15, when it is expected to provide updated guidance for the current quarter and the full year. Investors will be watching closely for details on capital expenditure plans and revenue growth expectations.

TSMC’s Taipei-listed shares rose 44.2% in 2025, significantly outperforming the broader Taiwanese market, which gained 25.7%. The strong performance mirrors broader momentum in the semiconductor supply chain driven by AI. Earlier this week, Foxconn, the world’s largest contract electronics maker and a key Nvidia server supplier, also reported robust fourth-quarter sales.