EL7.AI
StocksMedium•30 October 2026•
4 min read

TCS AI Revenue Reaches $3.1 Billion, Exceeding 10% of Total

Key Facts

1Quarterly AI revenue, annualized, reached $3.1 billion, exceeding 10% of TCS’s total revenue in the second quarter of fiscal 2027.
2AI revenue grew at a quarterly compound rate of 15% to 20% over the past four quarters.
3TCS quarterly revenue rose 0.2% from the previous quarter and 2.4% year on year in dollar terms, reaching $7.642 billion.
4Annual investment in training, hiring and infrastructure is about $1 billion, while management said AI services have higher margins than traditional services.
5AI tools could cut the modernization of core banking systems from 3 to 4 years to 6 to 18 months, according to management’s estimate.

TCS’s quarterly AI revenue, annualized, reached about $3.1 billion in the second quarter of fiscal 2027, exceeding 10% of total revenue, according to results announced by the company. The figure places AI among the leading drivers of the Indian IT services company’s business, while overall revenue growth remained limited quarter on quarter. The company said quarterly revenue reached $7.642 billion in the quarter ended September 30, 2026. AI revenue grew at a quarterly compound rate of 15% to 20% over the past four quarters, according to Moneycontrol. The annualized figure scales quarterly revenue to a full year and does not represent revenue earned over an entire fiscal year.

The comparison with the previous quarter shows continued expansion in the business: quarterly AI revenue, annualized, was $2.6 billion in the first quarter of fiscal 2027, up 13.6% from the previous quarter, according to TCS results. The figure then rose to $3.1 billion in the second quarter, with AI accounting for more than 10% of total revenue. By contrast, total revenue in the second quarter increased 0.2% quarter on quarter and 2.4% year on year in dollar terms, or 0.5% quarter on quarter in constant currency. Operating margin was 24.0%, while net profit reached $1.450 billion, with a net margin of 19.0%. The total value of new contracts was $9.6 billion, compared with $10 billion in the year-earlier period, according to published data.

TCS’s chief operating officer said demand for business outcomes delivered through AI-native solutions, AI-led enterprise transformation and autonomous global business services “continues to accelerate.” This demand provides a commercial backdrop to the company’s revenue growth, encompassing solutions tied to business outcomes and the modernization of enterprise systems. But expanding demand does not mean that all companies are ready to deploy advanced AI at scale. Only 5% of companies are mature enough for such expansion, Moneycontrol reported, while others face challenges with data quality, integrated infrastructure and AI-ready applications. Customer readiness therefore remains a factor in turning interest in new solutions into broad deployment.

At the same time, customer demand for productivity improvements is putting pressure on traditional services pricing, according to TCS management, as reported by Moneycontrol. Management said the company passed productivity gains on to clients in contract renewals and vendor consolidation deals, while these demands continue to push traditional pricing lower. AI services, meanwhile, have higher margins than traditional services, management said. Near-term gains are offset by annual investments of about $1 billion in training, hiring and infrastructure. The company manages margins at the business portfolio level, it added, placing the effect of AI expansion on profitability within the mix of services and investments, rather than revenue alone.

Management identified medium- and long-term opportunities in modernizing legacy banking systems, developing smaller, specialized language models and strengthening AI governance. It said AI tools could cut the modernization of legacy COBOL-based core banking systems from 3 to 4 years to 6 to 18 months. The potential time reduction could address one aspect of the complexity of modernizing banks’ technology infrastructure, according to the estimate reported by Moneycontrol. As part of its commercial expansion, TCS announced a five-year strategic partnership with Porsche AG to establish an AI mobility center of excellence and acquire Porsche subsidiary MHP, subject to regulatory approvals. It also agreed with Best Buy to transfer the latter’s global capability center in India to TCS and turn it into an AI capability center under a multiyear agreement.

In the markets, TCS shares rose as much as 5.6% on October 9, while the Nifty IT index gained 2.5%, according to Investing.com, which linked the move to investors’ focus on accelerating AI revenue despite slow growth in traditional business. The session’s performance suggests investors were tracking the new activity’s contribution as core business slowed, while the company’s quarterly revenue continued to post limited growth. Second-quarter results showed signed contract value of $9.6 billion, below the $10 billion recorded in the year-earlier period. The company’s disclosures list an interim dividend of 12 rupees per share payable on October 30, 2026. Management also said demand for AI-native solutions, enterprise transformation and autonomous global business services continues to accelerate.