Infosys shares rise 4% on partnership with Anthropic, lead Nifty IT 3% higher

IT stocks rise

• IT stocks surged as Infosys partnered with Anthropic.
• Infosys and Anthropic to develop advanced enterprise AI solutions
• Recent IT stock volatility driven by AI disruption concerns

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The shares of IT companies gained in trade on February 17, extending gains for the second consecutive session after a sharp decline. This came as heavyweight Infosys announced a strategic partnership with Anthropic, amid worries around AI-led disruption in the sector.

The Nifty IT index gained nearly 3 percent to hit the day's high at 33,703.10 on Tuesday. Infosys shares gained more than 4 percent, while HCL Technologies, Wipro and Persistent Systems shares gained nearly 3 percent each.

However, by the end of the day, IT stocks saw some profit booking and the Nifty IT index closed only 1 percent higher at 33,075.05.

Infosys and Anthropic announce partnership:

The sharp rise in IT stocks comes today after Infosys announced a strategic collaboration with Anthropic to develop and deliver advanced enterprise AI solutions to companies across telecommunications, financial services, manufacturing, and software development.

As part of the partnership, the two companies will integrate Anthropic's Claude models, including Claude Code, with Infosys Topaz AI offerings. A dedicated Anthropic Center of Excellence to build and deploy AI agents tailored to industry-specific operations will also be launched.

'Big gap between AI model in demo and what works in industry'

“There's a big gap between an AI model that works in a demo and one that works in a regulated industry – and if you want to close that gap, you need domain expertise," said Dario Amodei, Chief Executive Officer and Co-Founder, Anthropic. He added tha Infosys has that kind of expertise across important industries: telecom, financial services, and manufacturing.

"Their developers are already using Claude Code to accelerate their work and to create AI agents for industries that demand precision, compliance, and deep domain knowledge," he added.

Infosys CEO Salil Parekh meanwhile said AI is not just transforming business – it is redefining the way industries operate and innovate. "Our collaboration with Anthropic marks a strategic leap toward advancing enterprise AI, enabling organizations to unlock value and become more intelligent, resilient, and responsible. From modernizing financial services with intelligent risk management and compliance, to enabling engineering businesses to lead with AI-driven design and manufacturing, the goal is to leverage the joint expertise of Infosys and Anthropic to accelerate AI value realization for global enterprises," he added.

"The collaboration with Anthropic is a big game changer," said Dharmesh Kant, head of equity research at Cholamandalam Securities, adding that investors will watch out for any commentary from IT companies on ongoing AI disruption fears.

Why IT stocks have been volatile recently?

The sharp decline in IT stocks began earlier this month amid concerns that artificial intelligence can intensify competition after Anthropic's launch of a legal AI tool for its Claude AI chatbot. Investors remained concerned that AI was creating more competition for software makers. IT index had lost 8.2 percent last week, its worst performance in 11 months.

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said that the weak sentiment was amplified by global tech sector weakness and rupee depreciation, exacerbating FPI outflows.

US job growth unexpectedly increased in January and the unemployment rate fell to 4.3 percent. These signs of labor market stability could give the Federal Reserve room to keep interest rates unchanged for some time while policymakers monitor inflation.

However, the sharp increase in payrolls was seen in the health sector. According to economists quoted by Reuters, job openings and other indicators pointed to a tepid labor market, adding that job growth remained concentrated in the healthcare and social services industries, which accounted for nearly all the rise in employment.

Brokerages on IT:

Nomura said that the valuations of these stocks are in the ‘value’ zone, after the strong correction. It noted that the earlier fall was driven by key concerns around AI-led ADM disruption, SaaS irrelevance and margin compression.

The international brokerage however sees these AI-led disruption fears as oversimplifying IT services role. It explained what can happen in the near future. In case of a structural decline, where revenue faces sustained deflation of 6-7 percent, growth could slow to 2-3 percent. The stocks’ P/E ratio in this scenario will remain in the range on 10-12x.

In case these companies succeed in pivoting towards data and AI-led services, growth can normalize, with P/E in early 20s, according to Normura. In the third and final case, these IT firms can become AI orchestrators, where they opt for outcome-based model, leading to higher multiples and margin nonlinearity.

Nomura noted that the IT sector is currently trading below its 12-year average, and at a 12–39 percent discount to its 5-year average. Infosys, Cognizant, Coforge and eClerx are its top picks in the sector.

In an earlier note titled 'India IT Services: Looking through the AI fog', JPMorgan's Asian Pacific Equity Research team argued that artificial intelligence will create new areas of work, instead of simply shrinking the opportunities for IT vendors.

"IT firms remain the plumbers of the technology world…However, it's overly simplistic to assume that AI can automatically generate enterprise grade software and replace the value IT Services firms create across the cycle," it added.

Ravi Menon, Lead Analyst at Macquarie Group, meanwhile said that people underestimate the demand elasticity in technology. He said that AI won't change much as the cost of coding has always been dropping.

"Back in 2012-13, when the 'Low code no code' tools started emerging, this was a concern. But that actually became the fastest growing practices for Indian IT services firms over the time. So I don't think the new AI tools are any cause of concern for people. Firms should adapt to these tools, and change the business model a little to price a lot more on the outcome," he said while speaking to CNBC-TV18.

He added that the latest AI inventions don’t seem to be anything that is significantly disruptive. The recent fall in IT stocks is led by fear more than fundamentals, and the disruption worries are likely overdone, he further said.

According to Menon, this is the phase where investors should start buying fairly aggressively. However, he said that some of the large-caps may see 10 percent downside in the worst-case scenario. He added that demand trends are improving, and guidance in April could trigger a PE rerating in IT stocks.

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