JPMorgan turns cautious on IT, sees growth headwinds ahead

ET BureauLast Updated: Jun 25, 2026, 05:48:00 AM IST

Synopsis

JPMorgan anticipates challenges for Indian IT firms over the next two years, citing uncertain demand and a mix of technology and economic headwinds. The brokerage has downgraded several stocks, including HCL Technologies and Wipro, due to current valuations not reflecting these concerns. Analysts foresee reduced revenue growth forecasts for FY27, with a softer start to the year impacting the usual first-half strength.

Mumbai: JPMorgan said it sees further growth headwinds for the Information Technology companies over the next two years as the sector faces an uncertain demand environment from an unprecedented confluence of technology and business cycle headwinds from generative AI-led deflation and geopolitics.

The brokerage downgraded HCL Technologies, Tata Technologies and Wipro to underweight, as current prices have yet to capture the price action so far. Its top picks remain TCS, Infosys, TechM, Coforge, Persistent and Sagility.

Agencies

Weak demand, geopolitical uncertainty and AI-led deflation weigh on sector growth outlook for FY27

JPMorgan said it sees further cuts in FY27 revenue growth expectations for these companies. "With a softer start to the year, the ask rate for FY27 gets tougher, as the usual 1H strength is unlikely to play out this time," said the brokerage's analysts in a client note.

JPMorgan has cut April-June revenue growth assumptions for all companies on the back of delays in deal closures and revenue conversion. "Accenture's print and guidance confirms that weakness is not only in 1Q27, but also likely to bleed into 2QFY27," the note said.

JPMorgan said growth acceleration is unlikely even for mid-cap firms over the medium term.

"Until we see AI inflation becoming a tailwind, we would prefer to be cautious on the pace of growth recovery, as well as structural growth for the industry."

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