Infosys, TechM, Wipro, other IT stocks decline up to 2%, extend losses to 4th day amid AI worries: What lies ahead?

IT stocks fall for fourth straight session

• Indian IT stocks fell as AI disruption fears spooked investors
• Nifty IT index dropped over 9 percent in four sessions
• Experts say AI is a productivity tool, not a full replacement

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The shares of Indian IT companies extended decline on February 16 as worries around artificial intelligence-led disruption in the sector continued to spook investors.

The fall in the share prices pushed the Nifty IT index down around 1 percent to 32,360.35 in the morning trading hours of Monday. The index has now fallen more than 9 percent in four consecutive sessions of losses.

After falling around 13 percent in 2025, the index has declined about 15 percent so far in 2026, due to intensifying fears about artificial intelligence-driven disruption that could drag the earnings of software services companies.

Heavyweight Infosys shares fell more than 2 percent to trade at Rs 1,341 apiece. The stock has declined more than 10 percent in the past five days, and over 20 percent in the past one month.

Tech Mahindra shares fell more than 1 percent, while Wipro and LTI Mindtree shares were down nearly 1 percent each, as seen at 11.20 am. Tata Consultancy Services (TCS), HCL Technologies and Mphasis shares were trading in the red with marginal losses, while Coforge and Persistent Systems shares bucked the trend to trade in the green with marginal gains.

Why are IT stocks falling?

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. Investors remained concerned that AI was creating more competition for software makers, after Anthropic’s launch of a legal tool for its Claude AI chatbot.

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.

"The only jobs being filled in January are in health care and social assistance, along with some nonresidential specialty trade contractors probably related to AI facilities, all of which do not guarantee the economy's future success," the report quoted Christopher Rupkey, chief economist at FWDBONDS, as saying. "If you are looking for a job ... you are unlikely to find anything to apply for in today's report,” he added.

What lies ahead?

The correction in IT stocks shows that the market is worried as many investors believe AI is now ready to replace engineers, especially in India’s IT services sector, said Darshan Rathod, COO, MULTYFI. “In my view, this reaction is more emotional than rational,” he added.

Pranav Koomar, Founder and CEO of PlusCash, also said that the sharp weakness seen in the IT stocks today is more of a sentiment correction rather than fundamental weakness. The fears of advanced AI platforms potentially leading to a compression of traditional services revenue models have seen widespread selling, especially in the large caps, he said.

“Yes, AI tools today can write code, fix bugs, and deploy systems faster than ever before. Naturally, investors are questioning whether companies will need fewer engineers in the future. If manpower reduces, cost structures change. And when cost structures change, stock valuations react. But we must separate fear from facts,” said Rathod.

According to him, AI is extremely powerful but mainly as a productivity tool. It helps engineers work faster and more efficiently, as it reduces repetitive tasks. For IT firms, this can improve margins, according to him.

The analyst believes that AI cannot take responsibility. Large global corporations operate on complex, old, and highly customized systems. These systems require human judgment, business understanding, and accountability, and an algorithm cannot be held legally responsible if something fails, he said.

“From my perspective, this is not the end of the IT services story. It is a transition phase. There is also an important economic angle. When something becomes cheaper and more efficient, demand usually increases. If AI makes software development faster and more affordable, more companies across sectors may invest in digital transformation. That could actually expand the total opportunity size for IT firms,” Rathod said, explaining that the real change now is not about replacement, but adaptation as engineers who learn to work with AI will remain valuable, while those who ignore may struggle.

Koomar said that although new-age innovative applications will change the traditional approach to AI, Indian IT companies have healthy deal pipelines and established relationships with global clients. “For the short term, the stocks may face some more volatility as markets recalibrate pricing, but companies that are clear with their AI integration and digital transformation services are more likely to bounce back and drive the next leg of growth,” he said.

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