Why Infosys (INFY) is a Strategic Buy in the AI-Driven Cybersecurity Sector Amid IT Sector Downturns

In a global IT sector grappling with macroeconomic headwinds and muted demand, Infosys (INFY) stands out as a compelling investment opportunity. The company's strategic focus on AI-driven cybersecurity, robust financial performance, and capital-efficient initiatives-including a landmark ₹18,000 crore share buyback-position it to outperform broader industry challenges. This analysis explores how Infosys is leveraging artificial intelligence to redefine cybersecurity, supported by JPMorgan's Overweight rating and strong bookings, while its buyback program acts as a near-term catalyst for value creation.

JPMorgan's Overweight Rating: A Vote of Confidence in Stable Demand and AI-First Execution

JPMorgan has maintained an Overweight rating on Infosys with a price target of INR2,000.00, citing stable demand and strong bookings in high-growth sectors like financial services and mortgages according to JPMorgan's analysis. The firm highlights Infosys's $6.9 billion in bookings during H1 FY26 and a $1.6 billion NHS contract in Q3 2025 as evidence of underlying revenue momentum according to JPMorgan's report. These figures underscore the company's ability to secure large-scale, long-term contracts in a sector where vendor consolidation and cost optimization are driving demand.

JPMorgan also emphasizes Infosys's AI capabilities as a key differentiator. The firm notes that the company's AI-driven solutions are not only enhancing client outcomes but also enabling efficient resource allocation, which is critical in a cost-conscious environment according to JPMorgan's assessment. This aligns with Infosys's broader strategy to position AI as a core enabler of business value, particularly in cybersecurity-a sector where automation and predictive analytics are reshaping risk management.

AI-Driven Cybersecurity: A High-Margin Sub-Sector with Structural Growth

Infosys's AI-first approach to cybersecurity is gaining traction as enterprises prioritize resilience against increasingly sophisticated threats. According to the AI Business Value Radar 2025, IT-focused use cases-particularly in cybersecurity-are among the most successful in delivering business value, with 19% of implementations achieving full objectives and 32% achieving partial success according to Infosys's research. This is driven by AI's ability to automate threat detection, prioritize risk remediation, and enhance fraud detection through real-time analysis of unstructured data according to CXO Today's analysis.

A case in point is Infosys's work with a European investment firm, where AI-powered cloud security solutions improved threat detection and incident response times according to Infosys's case study. Such initiatives are not isolated; the global Artificial Intelligence in Cybersecurity Market reached $28.51 billion in 2025, with AI integration enabling adaptive security models and reducing reliance on manual processes according to Yahoo Finance's report. Infosys's reskilling programs, including partnerships with academic institutions, are further addressing the global cybersecurity talent shortage by fostering multidisciplinary expertise in AI and threat intelligence according to CXO Today's interview.

The ₹18,000 Crore Buyback: A Signal of Confidence and Capital Efficiency

Infosys's largest-ever share buyback-valued at ₹18,000 crore-represents a strategic move to return capital to shareholders while signaling management's confidence in the company's long-term prospects. The buyback, which opened on November 20, 2025, offers shares at INR1,800 each, a 19–21% premium over the stock price at the time of announcement according to The Times of India. Analysts view this as a psychological floor for the stock, particularly in a sector where valuation concerns have persisted due to macroeconomic uncertainty according to Economic Times.

The buyback's structure-reserving 15% of shares for small investors-ensures broad participation and reduces selling pressure from promoters, who have opted out of the tender offer according to The Times of India. If fully subscribed, the buyback will reduce Infosys's share count by 2.41%, potentially boosting earnings per share (EPS) and return on equity (ROE) by shrinking the equity base. This aligns with Infosys's commitment to returning 85% of cumulative free cash flow over five years via dividends and buybacks, reinforcing its reputation for capital-efficient governance according to The Times of India.

Navigating Sector Headwinds: Why Infosys is Better Positioned

While the broader IT sector faces challenges-including YTD stock price declines and uncertain demand visibility-Infosys's focus on value-based selling and AI-driven cybersecurity provides a buffer. JPMorgan notes that the company's success in managing foreign exchange dynamics and maintaining margins will be critical, but its current valuation appears attractive compared to peers according to JPMorgan's analysis. Meanwhile, the buyback's 17% premium offers a near-term profit-booking opportunity for investors while acting as a stabilizer for the stock price according to Economic Times.

Critics argue that the IT sector lacks a compelling growth narrative, but Infosys's $1.6 billion NHS contract and $6.9 billion H1 bookings demonstrate its ability to secure high-margin, long-term deals according to JPMorgan's report. These contracts, combined with AI's role in enhancing cybersecurity outcomes, create a flywheel effect: stronger client retention, higher margins, and reinvestment in innovation.

Conclusion: A Strategic Buy in a Transformative Sub-Sector

Infosys's combination of AI-driven cybersecurity solutions, strong bookings, and capital-efficient strategies makes it a strategic buy in a sector undergoing structural transformation. JPMorgan's Overweight rating and the ₹18,000 crore buyback further reinforce its appeal, particularly for investors seeking exposure to high-margin, AI-focused growth. While broader IT sector headwinds persist, Infosys's ability to deliver value through innovation and disciplined capital allocation positions it to outperform in the long term.