Indian IT stocks drop on AI disruption concerns

Indian IT stocks declined sharply following a report from Citrini Research that raised concerns about the impact of AI on the sector.

The NSE Nifty IT Index dropped up to 3.6% on February 24, marking a fifth consecutive day of losses, and erasing over US$54 billion in market value this month.

The report suggested that firms like Tata Consultancy Services, Infosys, and Wipro could face increased contract cancellations through 2027 due to AI advancements.

Shares of Infosys fell to their lowest since June 2023, while TCS and Wipro each declined more than 3%.

Citrini Research cited the decreasing cost of AI coding tools—comparing it to the cost of electricity—as a factor undermining traditional value propositions based on lower labor costs.

The report also influenced US markets, with IBM experiencing its largest one-day decline in 25 years.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Indian IT firms are leaning into AI adoption

Market worries tie AI to slower Indian IT growth, yet these companies rank among the largest corporate users of the tech.
Microsoft said Infosys, TCS, Wipro, and Cognizant will roll out more than 200,000 Copilot AI assistant licenses to streamline internal work 1.
TCS formed the AI.Cloud business unit. It also set up a dedicated NVIDIA unit inside AI.Cloud, while Infosys shipped small language models for banking 2.
Client budgets are moving from limited tests to larger AI programs with measurable results, especially in financial services and healthcare 3.

The AI selloff is pushing money from software into chips and safe havens

The pullback fits an “AI scare trade” that has hit Indian IT, consulting, software, and logistics names 4.
That fear fed a “SaaSpocalypse” storyline. The software sector exchange-traded fund (ETF) IGV revisited its post–Liberation Day low from April 7, 2025 as traders reassessed firms like Adobe and Atlassian 4.
Cash has shifted toward AI infrastructure builders, plus older defensive picks.
Software shares slid, Nvidia finished green, and the semiconductor index neared record levels. Money also moved into US Treasurys and gold 4.