Shares of HCLTech HCLT.NS rose as much as 8.1% on Tuesday, on track for their best day since April 2025, after stronger-than-expected margins, robust deal wins and growing artificial intelligence revenue helped offset concerns around weaker software sales. The results renew optimism in India’s $315 billion IT services sector, after market leader TCS TCS.NS also surged last week.

Large outsourcing firms are managing the shift to AI better than feared, maintaining profitability while building new AI-driven revenue streams. Shares of HCLTech were up 7.4% at 1,313.70 rupees by 2:14 p.m. IST. The Nifty IT .NIFTYIT index gained 4.6%, outperforming the benchmark Nifty 50 .NSEI , which rose 0.99%. HCLTech reported a 21.2% rise in second-quarter net profit to 51.32 billion rupees ($538.9 million), ahead of analysts’ estimate of 48.59 billion rupees.

Consolidated ​revenue rose 11.5% to 356.20 billion rupees, but marginally missed analysts’ average expectation of 356.86 ‌billion ⁠rupees. “HCLTech has posted a good set of numbers, which also surprised the Street,” said Kranthi Bathini, director of equity strategy at WealthMills Securities, adding that buying interest was emerging in large-cap IT stocks after the results.

The company’s annualised advanced AI revenue rose to $219 million from $171 million in the prior quarter, while strong deal bookings and a healthy pipeline bolstered confidence in its outlook. Jefferies upgraded the stock to “hold” from “underperform”, saying HCLTech was among the few large IT companies with visibility of more than 5% constant-currency revenue growth by fiscal 2028.

Nomura said HCLTech’s 18.2% EBIT margin exceeded expectations, helped by AI-led efficiencies, operating leverage and a richer mix of advanced AI services. JM Financial highlighted improving demand, while Systematix said strong deal wins and AI investments could help HCLTech outpace peers. The Nifty IT index is still down nearly 22% this year, reflecting concerns over global tech spending and AI-driven disruption of the sector’s traditional business model.