TCS, Infosys, other IT stocks surge as Cognizant lifts outlook, beats Q1 estimates

Cognizant maintained its full-year constant currency revenue growth guidance at 3.5–6 percent

IT stocks were in focus on May 2 after Cognizant Technology Solutions posted strong first-quarter results and raised its annual revenue forecast, thanks to rising demand for AI-driven IT services. Shares of Indian IT majors like TCS, Infosys, Wipro, and HCL Technologies rose up to 1.5 percent, outpacing the 1 percent gain in the Nifty IT index.

So far this year, Nifty IT index is down nearly 17.5 percent, but it has rebounded around 11 percent since April 9, following US President Donald Trump’s decision to pause reciprocal tariffs for 90 days.

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Cognizant reported Q1 revenue of $5.1 billion, a 7.5 percent increase year-over-year (8.2 percent in constant currency), beating both the top end of its guidance and Wall Street expectations of $5.07 billion. Net profit jumped 21 percent to $663 million for the quarter ended March 31, 2025. Unlike its Indian peers, Cognizant follows the calendar year for financial reporting.

The Nasdaq-listed firm maintained its full-year constant currency revenue growth guidance at 3.5–6 percent, but projected a sequentially weaker Q2, guiding for 5–6.5 percent growth.

CFO Jatin Dalal said the company faced no major macro-related disruptions or client cancellations during Q1. Any visible impact, he noted, appears limited to Q2. Demand from the financial services segment remained resilient.

Bookings rose 3 percent year-over-year to $26.7 billion, with a healthy book-to-bill ratio of approximately 1.3x. However, Q1 bookings slipped 7 percent from a year ago. The company signed four large deals (each valued at $100 million or more) during the quarter, down from ten in the previous one.

Following the earnings report, Cognizant shares edged up half a percent in after-hours trading on the Nasdaq.

CLSA analysts noted that a rebound in healthcare and BFSI (Banking, Financial Services, and Insurance)—especially after a two-year slump in the latter—marks a significant shift for IT firms with high exposure to these sectors.

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