TCS Heads for Worst Annual Stock Performance Since 2008 Crisis
Tata Consultancy Services is experiencing its worst annual stock decline since 2008, with shares falling 21.4% in 2025. The company is focusing on AI as a growth driver, generating $1.5 billion in annualized AI revenue representing 5% of total revenue. TCS announced a $700 million acquisition of Coastal Cloud and committed $6.5 billion for data center expansion, while facing sector-wide challenges from US immigration policy changes.
*this image is generated using AI for illustrative purposes only.
Tata Consultancy Services , the Tata Group flagship and India's largest IT services company, is experiencing its worst annual stock performance since the Global Financial Crisis. The company's shares have declined 21.4% in 2025, marking the steepest yearly fall in nearly 17 years and representing only the second negative year for TCS in the past eight years.
Historical Performance Context
The current decline represents the worst performance for TCS since 2008, when the stock plunged 56% amid the global financial meltdown. The previous negative year came in 2022, when shares fell 12.9%, breaking a streak of uninterrupted annual gains between 2017 and 2021.
| Year | TCS Annual Return (%) |
|---|---|
| 2025 | -21.4% |
| 2024 | 8% |
| 2023 | 16.5% |
| 2022 | -12.9% |
| 2021 | 30.6% |
| 2020 | 32.4% |
| 2019 | 14.2% |
| 2018 | 40.2% |
AI Business Emerges as Key Growth Driver
At its annual investor day held on December 17, TCS highlighted artificial intelligence as a critical long-term growth lever. The company reiterated its ambition to become the world's largest AI-led technology services provider and disclosed detailed metrics about its AI business scale for the first time.
| AI Business Metrics | Details |
|---|---|
| Total AI Engagements | Over 5,000 |
| Annualized AI Revenue | $1.5 billion |
| Revenue Contribution | ~5% of overall revenue |
| QoQ Growth | 16.3% |
| YoY Growth | 38.2% |
The AI revenue contribution of approximately 5% exceeds the nearly 3% advanced AI revenue reported by some industry peers. AI revenues are growing significantly faster than the core business, with quarter-on-quarter growth of 16.3% and year-on-year growth of 38.2% in constant currency terms.
Strategic Acquisitions and Investments
TCS has intensified its inorganic growth strategy with significant acquisitions and infrastructure investments. The company announced a $700 million all-cash acquisition of AI services and advisory firm Coastal Cloud, expected to close by January 31, 2026. This represents one of TCS's largest acquisitions since its 2004 listing.
| Recent Strategic Moves | Value/Details |
|---|---|
| Coastal Cloud Acquisition | $700 million |
| ListEngage MidCo Acquisition | $72.8 million |
| Data Center Investment | $6.5 billion over six years |
| Data Center Capacity | 1GW |
In October, TCS acquired US-based ListEngage MidCo for $72.8 million. Additionally, the company has committed $6.5 billion over six years to build 1GW of data center capacity, signaling a shift toward more aggressive expansion.
Sector Challenges and Regulatory Headwinds
The broader Indian IT sector continues to face significant challenges in 2025. While the Nifty 50 has risen nearly 10% this year, the Nifty IT index has declined approximately 13%, reflecting persistent investor concerns about the sector's prospects.
Key regulatory uncertainties include changes to US immigration policy under the Trump administration. The administration announced modifications to the H-1B visa selection process, replacing the random lottery system with a weighted mechanism prioritizing higher-skilled and higher-paid workers. A federal judge has also allowed a proposed $100,000 fee on new H-1B visa applications to proceed, with industry estimates suggesting potential margin impacts of 6% to 7% for Indian IT companies.
Market Performance and Analyst Outlook
Despite current challenges, analyst sentiment on TCS remains largely constructive. Of the 51 analysts tracking the stock, 36 maintain a 'Buy' rating, 10 recommend 'Hold', while five have a 'Sell' call. Shares were trading 0.96% lower on Wednesday at ₹3,215.60, with the stock declining approximately 6% over the past six months.
TCS maintained its operating margin aspiration band of 26% to 28%, emphasizing its continued focus on balancing growth, profitability, and strategic investments despite current market headwinds.
Historical Stock Returns for Tata Consultancy Services
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.25% | -3.14% | +2.19% | -7.39% | -22.91% | +10.21% |
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