- TCS stock is down by over 16% YTD, reversing the 8% gains generated in the last quarter of 2025
- Indian IT companies have traditionally relied on billings tied to the number of hours worked and AI is cutting deep into that model
- Despite the rising pressure, TCS as a giant in IT still has the advantage of using its muscle to lead the transition into the AI era
In early 2026, the Indian IT business isn’t just having a rough patch; it feels like things are changing at the foundation. Tata Consultancy Services (NSE: TCS), a long-time leader, has seen its stock drop to around ₹2,580, a level it hasn’t seen since October 2020. TCS stock did well in the last three months of 2025, gaining about 8%, but so far this year, it’s down over 16%. So, what’s happening, and what does it mean for Indian IT in 2026?
Reasons for the Underperformance
The main reasons for the decline are worries about AI and a shaky economy. Investors are concerned that AI will change IT services and cut into profits. This could mean that AI is reducing the need for typical services. Many people see AI as a direct threat to the way Indian IT makes money, which is based on the number of hours worked.
Investors believe that in the future, fewer work hours will be needed to produce the same results. For example, Anthropic, an AI startup in the US, has created tools that can automate hard legal and coding tasks for businesses.
The sector’s growth has been slow. According to Business Standard, revenue for FY25 was $282.6 billion, only up 5.1%, showing that clients are spending less because of a possible recession in the US. Besides AI, high-interest rates in the US have caused companies to be very careful with their tech budgets. TCS even announced that it would cut 2% of its global workforce in early FY26, which Jefferies said could cause problems in the short term. Also, US tariffs have negatively affected client deals.
Can TCS Stock Rebound in the Near-Term?
TCS stock could recover soon if its results for the fourth quarter of fiscal year 25 are better than expected, or if AI helps the company become more efficient. Even with the problems recently, there’s another way to look at it.
AI might take over routine tasks, but it also creates opportunities for AI setup, data management, and cloud-based workflows. Moving to AI requires skills in large-scale implementation, which only major companies like TCS can provide.
TCS Stock Price Forecast
TCS stock is currently oversold. The Relative Strength Index (RSI) on the 4-hour chart below is at 21.64 , showing extreme worry. The sellers will likely be in control as long as the stock is unable to break above the ₹2800 pivot. The first support is at ₹2,670, but the action could go lower and test ₹2,585 if the sellers extend their control.
On the upside, the first hurdle past the pivot mark is the Volume Weighted Moving Average (VWMA) at ₹2,882. The bearish narrative will be invalid above that level. Furthermore, if the momentum turns that mark into a support, the next target will be the psychological ₹3,000 level.
Tata Consultancy Services stock on the 4-hour chart on TradingView with key levels of support and resistance for February 16, 2026
The main factors are worries about AI, US tariffs, high employee turnover, and slow revenue growth. Some think these are temporary, but others worry about long-term outsourcing threats from AI.
Yes. Unlike past dips caused by the economy, this one is due to AI tools that threaten the traditional billing model. The market is reassessing the long-term growth rate of the IT sector.
A quick recovery depends on US inflation data and comments from the Federal Reserve. If interest rates stabilize and TCS announces AI-related contract wins in its next earnings call, a recovery is possible.