AI impact! Infosys, Coforge, Mphasis, HCL Tech, KPIT, Persistent, LTM, TCS: Why IT stocks tanked today

IT stocks: A total of 75 out of 80 stocks from the BSE IT index tumbled today, as the index plunged 5.26 per cent to 27,611.55 on conservative guidance by IT firms, raising fears the AI deflation will impact earnings going into FY27. Data showed Infosys was quoting 6.61 per cent lower Rs 1,160.50 by 1.46 pm after a weak FY27 guidance, perhaps affected by key client ramp-down, AI led deflation and the Gulf war overhang. 

"Sustained large deal wins in FY26, AI-first transformation tailwinds, and disciplined capital allocation have enhanced long-term visibility, but the FY27 guidance reiterates the seriousness of AI led deflation and this could just be the beginning of what’s to come," Nirmal Bang warned. 

Mphasis declined 6.03 per cent to Rs 2,139.65 while HCL Technologies also tanked 5.89 per cent to Rs 1,202. LTIMindtree, Persistent Systems, KPIT Tech, Cyient and TCS fell 5-6 per cent. Zensar Tech, Tech Mahindra and Wipro and Hexaware slipped up to 4 per cent. The recent guidance by IT majors seemed building in compression in the businesses due to AI led productivity gains.

Among the major disappointment, Infosys gave a revenue guidance of 1.5–3.5 per cent revenue growth in constant currency terms. Axis Securities said discretionary spending remains muted across sectors as clients focus on cost optimisation, resilience, and vendor consolidation, though this is partly offset by rising demand for AI-led productivity and automation initiatives. 

"Guidance bakes in 75-100bps impact due to lower revenue from a large European manufacturing client, amid a challenging macro environment & Infosys walking away from an unattractive deal," Anand Rathi said.

Analysts said Cyient underperformed expectations on both revenue and margin fronts. Its net profit was hit by a couple of one-off items, including impairment of a Tooling business asset and expenses related to a proposed transaction that did not materialise. ICICI Securities suggested a revised target of Rs 1,071 on the stock.

LTM (Erstwhile LTIMindtree) reported a muted Q4 operating performance, even as it saw sixth consecutive quarter of order intake exceeding $1.5 billion. LTM indicated that there is no observable trend of early contract renegotiations, although clients are increasingly demanding higher productivity, innovation, and AI infusion within existing contracts, Emkay Global noted.

"LTM is at 7 per cent premium to Mphasis for a similar growth profile in FY27, as per consensus. We reduce our EPS estimates by 3-5% over FY27-28E, incorporating 4Q results. Maintain target multiple of 19x Sep 27 – revised target of Rs 4,115 (versus Rs 4,285 earlier). Maintain REDUCE," JM Financial said.

FY27 guidance by HCL Technologies and Q1 outlook by Wipro also failed to meet Street expectations, raising fears that AI-led deflation has begun to bite and is increasing pressure on the existing book of business. Infosys set its FY27 revenue growth guidance at 1.5-3.5 per cent in constant currency (CC) terms. HCL Tech had guided for 1–4 per cent revenue growth in FY27, following which its shares had plunged 11 per cent in the very next day.