Wedbush: Coforge's Encora AI Deal 'Decent,' but Tier-1 IT Firms Hold GenAI Edge

• Moshe Katri of Wedbush Securities calls Coforge's $2.35 billion Encora acquisition a "decent deal" but favors tier-1 IT firms' GenAI strategies.
• Katri believes true GenAI competitive edge comes from changing IT services business models, decoupling revenue from headcount, and performance-based contracts.
• Coforge's acquisition aims for $2.5 billion combined revenue, highlighting Encora's "AI native DNA" and strong margins, with a premium valuation.
• Katri questions Encora as a "pure-play GenAI" firm, suggesting it has AI expertise among other things, unlike true pure-plays like Fractal or Trident.
• Tier-1 firms (TCS, Infosys) embedding AI across services are better positioned than mid-caps acquiring "AI-derivative" companies, due to integration expertise.

Why It Matters: While Coforge's AI acquisition is "decent," Wedbush sees tier-1 IT firms better positioned for GenAI's future.