A big decline is being seen in the shares of domestic IT companies. This trend is no longer just the result of fluctuations in the global economy. According to analysts, this new technology has become a story of structural threat posed by generative AI. This has raised questions on the decades-old business model. India’s four biggest IT stocks – TCS, Infosys, Wipro and LTIMindtree – have fallen up to 57% from all-time highs. The market cap of 10 major IT companies has declined by Rs 19.3 lakh crore from the peak. There are two major reasons for this decline – tightening monetary policy in America and automation of coding and back-office work through generative AI. This is directly challenging the traditional business model of IT companies. Experts are now fearing not only a decline in earnings but also a permanent de-rating of the sector. This means that if the situation does not improve, IT shares may fall further. Risk increased – Now capital will shift to cloud infrastructure, data center, cyber security DBS Bank – Structural risk related to AI is increasing – The deepest impact of the increasing use of AI is visible on India’s IT sourcing services sector, which has been a strong base of exports, employment and returns. – Generative AI is increasingly automating coding, customer support and back-office processes. Due to this, IT services companies are losing their work. In the coming time, capital will shift towards cloud infrastructure, data center and cyber security. On the other hand, the traditional outsourcing model will remain under pressure. ICICI Pru AMC – IT sector may make a comeback Despite the increase in digital content, traditional newspaper companies have remained profitable. This shows that every business changes itself according to the circumstances. The IT sector can also make a comeback like the newspaper industry. The current decline in this is giving investors an opportunity to place small bets against the current. Kotak Inst. Equities – Infosys’s position is better. Accenture’s weak results, fear of earnings growth slowing down to 3-4% in FY 2026-27 and falling bookings have increased the troubles of the IT sector. Due to the West Asia conflict, companies have cut down on spending. But Infosys seems to be in a better position due to its Tier-1 clients. Sensex rose 444 points, but IT index again fell by 2 percent. On Wednesday, Sensex rose 444 points to 76,923 and Nifty closed at 24,006 with a rise of 140 points. Strong buying was seen in FMCG, realty and banking stocks. Eternal, Adani Enterprises and Nestle India were the top gainers in Nifty. The midcap and smallcap indices rose 0.34% and 0.36%, respectively. The IT index fell nearly 2%.
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Gen AI IT companies are losing work: Top-4 shares fell by 57% from peak; Market cap of 10 IT companies decreased by Rs 19 lakh crore
