Indian IT Shares Plunge Amid Global AI Rally
Shares of Indian IT companies, including Infosys, Tech Mahindra, and Tata Consultancy Services, plunged on Wednesday, extending losses as optimism around the global AI trade revived following strong earnings from SK Hynix and momentum from Anthropic’s IPO.
How SK Hynix and Anthropic Revived the Global AI Trade
The Nifty IT index dropped more than 3% to lead sectoral losses after South Korea’s Kospi surged 6%. The rally followed an earnings report from SK Hynix showing a more than seven-fold increase in quarterly profit. The memory chipmaker also announced plans to return about $75 billion to shareholders and forecast strong demand driven by infrastructure investments.
Peer Samsung Electronics saw its shares advance nearly 9% to lift the broader market. On Wall Street, investor enthusiasm returned following Anthropic’s filing for an initial public offering. The maker of Claude positioned public-market investors to buy stakes in leading AI developers, shifting market sentiment away from recent fears of software sector disruption.
Impact on Indian IT Services and Market Valuations
Earlier in the year, Anthropic’s launch of new plug-ins for Claude sparked a sharp rout in India’s IT stocks. Market observers dubbed the phenomenon the ‘SaaSpocalypse,’ warning that hyperscaler spending shifts would displace traditional software-as-a-service providers. While stocks partially recovered as analysts questioned massive artificial intelligence spending and floated bubble warnings, Wednesday’s semiconductor rally renewed pressure on domestic firms.
Mphasis and Infosys shares plunged 5% each during the session. Tech Mahindra, Coforge, Tata Consultancy Services, and HCL Technologies dropped around 3% each. Persistent Systems, LTI Mindtree, Wipro, and OFSS shares declined approximately 1% each, according to market data reported by economictimes.indiatimes.com.
Despite the sell-off, investor Michael Burry warned of a potential market crash if the artificial intelligence boom fizzles out. In such a scenario, analysts note that Indian IT services firms could emerge among the key beneficiaries after enduring valuation adjustments.