New Delhi, Sept. 30 -- India's large IT companies are expected to report another muted quarter in Q2FY27 as AI-led deflation and weak demand weigh on growth, while mid-tier firms are likely to outperform on market-share gains and stronger execution, according to a report by Kotak Institutional Equities.

AI investments remain at an early stage for most companies, with enterprises largely focused on using the technology to cut costs and improve productivity rather than generate new revenue. Additionally, the growing adoption of open-source and open-weight AI models could intensify pricing pressure for IT services companies, the report said.

While these models could create incremental opportunities for service providers, Kotak expects "gro...