HCLTech targets 25% upside with NVIDIA AI Lab; secures $100M+ Q2 AI revenue despite 1% stock dip

HCLTech’s NVIDIA AI Lab: Strategic Move Meets Market Skepticism

HCLTech’s NVIDIA partnership creates a Physical AI lab, but the stock dropped 1% on announcement day despite strong Q2 AI revenue crossing $100M. At ₹1,594.60, the stock trades 20.7% below its 52-week high, presenting a potential value play for traders betting on AI monetization. However, analyst divergence signals caution while Motilal Oswal sees 25% upside, ICICI recommends holding with minimal gains ahead.

What Happened

HCLTech launched a Physical AI Innovation Lab with NVIDIA in Santa Clara, California on November 17, 2025, according to ScanX. The facility will leverage NVIDIA’s full technology stack Omniverse, Metropolis, Isaac Sim, Jetson, and Holoscan combined with HCLTech’s VisionX, Kinetic AI, IEdgeX, and SmartTwin solutions. The lab targets Global 2000 enterprises seeking to scale physical AI and robotics for industrial automation, bridging digital simulation to real-world deployment. This expands HCLTech’s AI ecosystem beyond digital to physical implementations. The partnership builds on a 2020 collaboration when HCLTech joined NVIDIA’s Partner Network. According to HCLTech’s October 17, 2025 earnings report, the company generated over $100 million in Advanced AI revenue in Q2 FY26, representing 3% of total revenue.

Stock Performance & Analyst View

HCLTech trades at ₹1,594.60 based on November 14 closing data, up 5.44% this week. According to Nasdaq (November 17, 2025), shares fell 1% on the announcement day, reflecting initial market skepticism. The stock sits well below its ₹2,012.20 52-week high, with support near the ₹1,490-1,500 zone seen in recent weekly lows.

Analyst sentiment shows clear divergence:

• Motilal Oswal (Oct 13, 2025): Buy rating, ₹1,800 target = 12.9% upside
• Motilal Oswal (Jul 22, 2025): Buy rating, ₹2,000 target = 25.4% upside
• ICICI Securities (Oct 14, 2025): Hold rating, ₹1,620 target = 1.6% upside
• Consensus (44 analysts via Investing.com, Oct 13): Buy rating, ₹1,645 average target = 3.2% upside

The range between ₹1,620 and ₹2,000 targets reveals uncertainty about execution. HCLTech’s EBIT margin improved to 17.5% in Q2, up 116 basis points sequentially, but remains below TCS’s 24.25% (per HCLTech Oct 17, 2025).

What This Means for Traders

The muted market reaction signals trader skepticism about near-term revenue impact. For aggressive traders, the ₹1,490-1,500 level offers a potential entry point with tight stops below ₹1,480, betting on the 25% upside scenario if AI monetization accelerates. Conservative traders should wait for a break above ₹1,605 weekly high with volume confirmation, as this would signal renewed momentum toward ₹1,700 resistance.

Key support sits at ₹1,490 (recent weekly low); a breach opens risk toward ₹1,400-1,430. Resistance layers appear at ₹1,605 (this week’s high), ₹1,680 (July peak), and ₹1,740 (June high). The 20.7% discount to 52-week highs provides valuation cushion, but margin pressure remains a concern.

Risk factors could invalidate the bull case:

• Q3 FY26 margins falling below 17% would contradict management guidance
• Competition from TCS’s WisdomNext and Infosys Topaz could slow deal wins
• Execution challenges in scaling physical AI solutions beyond pilot phases

Watch for the Q3 FY26 earnings catalyst in mid-January 2026, where AI revenue growth and FY26 guidance revision will determine if the ₹2,000 price target is achievable.

The Bigger Picture

India’s IT spending is projected to reach $160 billion in 2025, with software spending growing 17% and AI-enabled offerings driving demand, according to Gartner (Nov 12, 2024). HCLTech’s $3.64 billion Q2 revenue represents a 4.6% YoY constant currency growth, outpacing many peers. The Indian AI market is forecast to hit $7.84 billion by 2025, with IT services evolving from talent provisioning to end-to-end solutions. HCLTech’s 500+ GenAI projects and 400 clients position it competitively, though TCS leads in margins (24.3%) and Infosys shows stronger near-term momentum. The shift toward physical AI and robotics opens a new addressable market beyond traditional IT services, but success depends on demonstrating ROI to CFOs a challenge HCLTech’s EVP noted remains significant.

Closing

HCLTech’s NVIDIA partnership validates its AI strategy, but traders need proof of margin expansion and sustained AI revenue growth. Initiate partial positions near ₹1,500 support for the aggressive trade, or wait for ₹1,605 breakout confirmation. The January earnings report is your next major catalyst anything below 18% EBIT margin guidance risks retesting ₹1,400, while acceleration toward $150M+ quarterly AI revenue could trigger a rally toward ₹1,800.

Disclaimer: This blog has been written exclusively for educational purposes and does not constitute investment advice or personal recommendations. The author is not SEBI-registered as an investment advisor. Recipients should conduct their own research and consult a qualified, SEBI-registered investment advisor before making any investment decisions. Investments in the securities market are subject to market risks; read all related documents carefully before investing.