HCLTech Revenue Up 10.7% in Q2, Rakes in $100m from AI

HCL Tech has posted an annual increase in consolidated revenue of 10.7% in Q2 FY26 to approximately ₹31,942 crore due to high results within the engineering, digital, and AI business. Although the increase in revenue was substantial, the net profit was almost the same, restrained by the cost of restructuring.

The company generated AI initiatives alone during the quarter, bringing in over $100 million in revenue, which is an indication of AI starting to leave the lab and turning into a monetisable business line.

The question now is: Will AI remain a sustainable growth driver of HCLTech, or is this merely a peak of an unstable technology cycle?

Which Business Units Led the Growth Push?

The engineering and online bets of the company are evidently resulting in strong deal momentum.

• Engineering & R&D services: This saw the strongest expansion, with growth of over 13% YoY, boosted by recent deals, including one with Volvo Cars and another with Equinor.

• Geography-wise broad growth: All major regions posted gains, Europe grew ~7.6%, the rest of the world ~17.9%, while the U.S. saw more modest growth (~2.4%).

• Digital / AI portfolio: AI, advanced analytics, and digital transformation solutions contributed strongly, and digital now accounts for ~42% of the services portfolio.

• Bookings momentum: HCLTech secured $2.57 billion in new deal wins this quarter, marking strong freshness in its order book (without reliance on any mega deal).

Together, these drivers suggest HCLTech is not just riding old contracts, but renewing and expanding its business base.

Why Profit Didn’t Catch Up, Cost & Margin Pressures

Even with revenue growth, net profit stayed flat at about ₹4,235 crore, with earnings before interest and tax (EBIT) impacted by restructuring charges and margin compression.

Margins dropped by around 130 basis points year-on-year, reflecting investments in reorganisation and rising input costs, though forex tailwinds and rupee depreciation partly softened the blow.

On a sequential basis, though, margins improved and profit rose ~10.2% QoQ, indicating some operational recovery.

This divergence between revenue momentum and profit stability raises the importance of cost discipline going forward.

Where Are the Critical Investor Signals?

The few critical levers that investors should keep an eye on as the company goes through this growth-cost tradeoff are as follows. These will come into play as to whether the existing momentum will be translated into sustainable shareholder value.

AI Monetisation & Traction

The $100 million AI revenue is a landmark, but sustaining and growing it further will test how competitive, scalable, and defensible HCLTech’s AI offerings become.

Margin Recovery & Operating Efficiency

Can HCLTech reverse margin erosion? Improvements in margin, especially in non-AI segments, will show whether the business can absorb growth without losing profitability.

New Deal Wins & Renewal Rate

Future quarters must show not just large deals, but renewal strength and deepening relationships with existing clients, a signal of stickiness beyond AI hype.

Geographic Balance & Currency Impact

How well HCLTech navigates currency movements, especially in the U.S. and European markets, will influence reported consolidated outcomes.

Execution Risks & Restructuring Impact

Restructuring costs weigh on near-term results. The ability to manage change without disruption to delivery or talent is crucial.

How Does This Shape the Sector?

HCLTech’s performance comes at a time when global tech demand is under pressure due to macro uncertainty, inflation, and cautious IT spending. Surpassing market expectations with double-digit growth (vs peers) casts it in a stronger light.

Its decision to retain full-year revenue growth guidance in constant currency (3–5%) suggests management remains cautious about headwinds ahead.

In addition, the shareholders are encouraged by the maintained dividend of ₹12 per share; the 91st consecutive quarter of payout, and it proves that there is some certainty of cash flow despite strategic investment.

Conclusion

The data presented in HCLTech Q2 shows that the investments in AI can already contribute to tangible results, although the pressures of the legacy costs suppress the profit growth. It will be key over the next few quarters whether the AI momentum can scale, margins can reverse, and new wins can support growth. The operative question to investors: The coming quarters will reveal the answers to the impending question: Whether AI can become a sustained growth driver or will legacy cost pressures limit its impact?

Sources-

• Reuters
• Business Wire
• The Times of India
• The Economic Times