Infosys (INFY) Extends Digital Services JV With Temasek
Infosys Limited INFY recently announced that it is set to extend its joint venture (JV) with Temasek. Initially, the two companies collaborated in 2018, with Infosys acquiring a 60% stake in the JV while Temasek held 40%.
The Infosys-Temasek JV, named Infosys Compaz, was established with INFY's vision to enter into the Southeast Asian market, with the former benefiting from an increase in workforce capacity and the latter gaining from improvements in its IT services.
In the past five years, the JV has undergone numerous partnerships with large corporations in Southeast Asia. These partnerships have worked on multiple digital transformation journeys in the fields of cloud, cybersecurity, digital, automation, data and analytics and artificial intelligence (AI).
Infosys Limited Price and Consensus
Infosys Limited price-consensus-chart | Infosys Limited Quote
Infosys Compaz is leveraging the capabilities of Infosys Cobalt and Topaz to enable its customers to enhance the cloud and AI capabilities. The recent extension reinforces the company's 2018 commitment to invest in advanced technologies, capabilities and workforce development for high-quality professional services.
Shares of Infosys have underperformed the Zacks Computer and Technology sector in the year-to-date (YTD) period. Shares of INFY have declined 6.2% YTD against the Computer and Technology sector’s rise of 36.1%.
INFY's digital transformation offerings are receiving a positive response from its clients. Furthermore, as clients focus on vendor consolidation, the company is benefiting from stronger deals. In the second quarter of 2024, Infosys signed 21 large deals across America and Europe.
However, the company is facing a mixed bag of challenges. Its business is being affected by near-term uncertainties stemming from inflation and high interest rates. Slow decision-making processes, along with softness in digital transformation programs and discretionary spending in the current uncertain macroeconomic environment, are hurting the company’s volumes.
Nevertheless, during the recently reported financial results for second-quarter fiscal 2024, Infosys’ revenues grew 2.5% year over year and 2.3% sequentially. Its AI capabilities, like those of Infosys Topaz, have shown promising results and have increased its market share, thus more than offsetting the negative impact of the aforementioned factors.
Zacks Rank & Stocks to Consider
Infosys currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, Synopsys SNPS and Palo Alto Networks PANW, each sporting a Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
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NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 211% year to date.
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