Holding Infosys shares? Citi explains what’s next for the IT major

Shares of Infosys have remained under pressure in recent months, even as global brokerage Citigroup maintained its ‘Neutral’ rating on the IT major with a target price of Rs 1,440.

The brokerage said financial services and energy, utilities and resources segments are showing decent momentum, which could support growth in the near term.

However, Citi noted that the deflationary impact from artificial intelligence has been lingering for the past two years, as automation and AI-led efficiencies continue to reshape traditional IT service models.

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AI investments and new value pools

According to the brokerage, preparatory spending across six emerging value pools could help offset the AI-driven deflation impact over the next few years.

Citi added that there is currently a large and widening gap between AI evolution and enterprise-level adoption. This means companies are investing heavily now, while full monetisation may take time.

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The brokerage also highlighted that Project Maximus, Infosys’ internal efficiency programme, still offers multiple levers to improve productivity and drive cost efficiencies.

On margins, Citi said gross margins have expanded slightly on a year-on-year basis, but the gains have largely been reinvested into AI capabilities and sales and marketing initiatives.

The firm also pointed to large AI partnerships, noting that Infosys believes it has a strong value proposition in this segment as enterprises increasingly explore AI-led transformation.

Stock performance remains weak

Despite these strategic initiatives, the stock has seen a sharp correction over multiple timeframes.

Shares of Infosys have fallen 12.44 per cent in the past one month and 12.85 per cent over six months. On a year-to-date basis, the stock is down nearly 20 per cent on the NSE.

Over a one-year period, the stock has declined 22.95 per cent, while in the last five years it has slipped about 4.64 per cent.

On Friday, the stock closed at Rs 1,311, up Rs 5.20 or 0.40 per cent.

Why the stock is under pressure

Several factors are putting pressure on shares of Infosys and the broader IT sector.

Investors are worried about the impact of advanced AI tools. Startups such as Anthropic are launching new products like Claude Cowork. These tools can automate many coding and software tasks. This may reduce billing hours for traditional IT services. As a result, investors fear revenue growth could slow for IT companies.

The sector has also seen rating cuts by brokerages. Firms such as Jefferies recently downgraded several IT stocks. They also cut price targets by more than 30 per cent. The brokerage cited long-term risks from AI disruption.

Foreign portfolio investors have been selling IT stocks aggressively. FPIs sold about Rs 11,000 crore worth of IT shares in the first half of February 2026. This selling has added pressure on stock prices.

Global demand for IT services remains weak. Many Western companies are also cutting discretionary technology spending. This is affecting growth expectations for IT firms.

Technically, Infosys shares are trading close to their 52-week low levels. The stock has already fallen around 20–25 per cent from its recent peak, which is also weighing on investor sentiment.