Rs 1.3 lakh crore wiped off! Why TCS, Infosys and other IT stock prices have plunged?
Technology stocks fall: IT stocks dropped over 5 per cent on Thursday, pulling the Nifty IT index close to its lowest level in nearly 10 months as ongoing concerns over artificial intelligence-led disruption and diminishing expectations of an early US Federal Reserve rate cut dented market sentiment.The 10-stock Nifty IT index was the worst-performing sector for the day and continues to be the weakest segment so far this year, after declining 12.6 per cent in 2025 and another 12.2 per cent in 2026, highlighting sustained weakness in technology stocks amid global macro uncertainty and structural sector shifts.Technology stocks led the slide, with Tech Mahindra, Infosys and Tata Consultancy Services (TCS) tumbling nearly 6 per cent each to emerge as major laggards on the Sensex. BSE MidCap Select Index fell 0.48 per cent and the SmallCap Select Index slipped 0.28 per cent, with sectoral indices led lower by Focussed IT, which slumped 5.40 per cent, followed by IT, down 5.29 per cent.The panic selling started after US AI company Anthropic launched Claude Cowork. This AI tool can reportedly do legal work like contract reviews and compliance tasks – work that IT companies usually do. Jefferies called this the “SaaSpocalypse” as investors worried that AI might replace IT companies rather than help them.“Tech stocks, reeling under the Anthropic shock, are unlikely to recover soon,” said Dr VK Vijayakumar from Geojit Investments. Some experts think companies could lose up to 40% of their revenue as AI starts doing work that humans used to do.In a twist of things, US job numbers showed 130,000 new jobs and unemployment at 4.3 per cent. This means the Federal Reserve might not cut interest rates soon, which is bad news for tech stocks.The big question now is whether IT companies can survive AI competition. Thomas Shipp from LPL Financial said, “The fear with AI is that there’s more competition, more pricing pressure, and that their competitive moats have gotten shallower, meaning they could be easier to replace with AI.”Motilal Oswal warned that AI will make old software and testing less important. However, they suggest watching for AI partnerships in the next 3-6 months, which could lead to new AI service deals by mid-2026.AI is now threatening areas like legal services and customer support – work that IT companies thought was safe from automation. This has created serious concerns about the future of traditional IT services companies.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
