INFY: Await More "Info" on Potential AI Upside; Initiate on Infosys with Equal Weight and $11 PT

Research evidence excerpt

INFY: Await More "Info" on Potential AI Upside; Initiate on Infosys with Equal Weight and $11 PT

Infosys Limited Equity Research

Theme 1: Impact of AI on the IT Services Industry

Management commentary suggests that INFY has proactively laid the foundation to realize AI-

related benefits through employee training and product initiatives. Currently, ~90% of the company's

software developers have been trained on AI, and while the company will likely never reach 100% due

to attrition/hiring, INFY expects all developers to use AI in their daily workflows. Currently, INFY has

generated over 28M lines of code and has built over 500 agents using AI.

As a result, software engineers are likely to become more consultative over time, focusing on

conceptualizing and solving problems as more code is written by AI tools. In other words, this may

ultimately result in developers acting as liaisons between the end customer and the AI tool.

These tools are expected to drive increased productivity, enabling IT Services vendors to deliver more

robust code with fewer human billable hours. Currently, INFY is actively sharing AI-driven productivity

savings with clients, and in return is seeing increased overall volumes from these customers, in areas

such as data/application modernization. In our view, the increased use of AI could lead to greater use

of outcome-based pricing vs. the traditional time and materials model over time (discussed more in

Theme 3).

As of 2025, 23% of total IT spending is on AI, while 50% of enterprises have a dedicated AI budget

according to Foundry's AI Priorities Study. This highlights a significant TAM opportunity, as we believe

the number of enterprises with AI budgets are likely to grow as AI-adoption matures. While INFY