Infosys, Wipro, TCS, TechM, HCL Tech shares stare at selloff on AI disruption fears

Another round of selling in American Depository Receipts (ADRs) of Infosys Ltd and Wipro Ltd is likely to weigh on Indian IT stocks on Friday. Infosys ADRs plunged 9.4 per cent to settle at $14.21 on the NYSE overnight, before edging up 0.49 per cent to $14.28 in after-hours trade. Wipro ADRs fell 4.6 per cent to $2.28. Cognizant, which is not listed in India, declined 7.16 per cent to $65.83. In the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact, analysts warned .

Vinod Nair, Head of Research at Geojit Investments said AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model.

"Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Even ERP implementation, as highlighted by Palantir’s recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing."

Samir Arora of Helios Capital, however, in a post on X said: "Everything does not have to dramatized so much. Disruption does not mean extinction. Whatsapp disrupted SMS but you still use SMS. OTT disrupted TV and theatres but you still see TV and go to movies. Fear of disruption can mean lower valuations, lower growth expectations, lower terminal growth assumptions- all leading to underperforming stock prices."

Analysts noted that US markets were witnessing a rotation, with crowded winners such as high-beta and high-volatility stocks seeing a sharp fall. They said Anthropic’s release of specialised Claude Cowork plugins appeared to have accelerated the selloff in US software names.
There were fears that artificial intelligence could collapse entire layers of the software value chain, which led to indiscriminate selling across SaaS, consulting and data analytics stocks. In a recent note, Nirmal Bang said that Palantir Technologies and Anthropic had accelerated the re-pricing by attacking time and workflow economics. It said Palantir Technologies’s claim that SAP ECC to S 4 migrations can be completed in weeks rather than years directly compresses duration, labour intensity and client lock-in.