IT stocks fall 5% as AI fears rattle Infosys, TCS
What's the story
Shares of Indian IT companies witnessed a sharp decline on February 12. The fall was in line with their Wall Street counterparts and was triggered by fears of AI-led disruptions. This came despite a stronger-than-expected US jobs report for January. The positive employment data failed to boost investor sentiment, keeping the sector under pressure.
Market impact
Nifty IT index falls over 4%
The Nifty IT index, a key barometer of the sector's performance, fell over 4% to 33,588.80. This made it the top sectoral loser in early trading. Analysts have attributed this decline to concerns over automation, AI adoption, and potential margin pressure on investor confidence in the IT space.
Stock performance
Individual stocks mirror Nifty IT index decline
The fall in the Nifty IT index was mirrored by individual stocks. Coforge and Infosys saw their shares drop by around 5% each, with Infosys hitting its lowest level since April 2025. Other companies such as TCS, Tech Mahindra, Mphasis, LTI Mindtree and Persistent Systems also witnessed a decline of over 4% each. HCL Technologies and Wipro weren't spared either as they fell by more than 3%.
Market analysis
US jobs data fails to lift investor sentiment
The US jobs data showed a surprising increase in job growth for January, with the unemployment rate falling to 4.3%. However, these signs of labor market stability failed to boost investor sentiment. The report was mostly concentrated in the health sector, leading economists to believe that job growth remained concentrated in healthcare and social services industries.
AI impact
AI fears continue to haunt IT sector
Earlier last week, IT stocks had witnessed a major fall over fears that artificial intelligence could intensify competition. This was after Anthropic's launch of a legal AI tool. The move has sparked fears of an impending AI-fueled disruption in the data and professional services industry, which were once considered major beneficiaries of the AI era.