India’s information technology sector may have endured a steep market correction amid fears surrounding generative AI, but brokerage Nuvama believes the industry is far from facing an existential crisis. Instead, the firm argues that the current pessimism resembles earlier phases when new technologies were initially viewed as disruptive but eventually created fresh growth opportunities.
Invoking a famous line from Mark Twain, the brokerage suggested that speculation about the industry’s demise is premature. In fact, Nuvama has taken a contrarian stance by upgrading all the top 10 Indian IT services companies to a “Buy” rating following a sharp selloff triggered by Gen-AI concerns.
Why Gen-AI Fears May Be Overrated
According to Nuvama, the debate around generative AI threatening the traditional offshoreIT servicesmodel echoes earlier industry turning points. From the Y2K transition to remote infrastructure management and the digital transformation wave between 2015 and 2018, similar fears had emerged in the past.
Nuvama argues that enterprises will still depend heavily on service providers to implement and manage complex technology systems. As the brokerage noted, “We see no existential threat from Gen-AI,” highlighting that businesses still require expert partners to tailor AI tools for intricate legacy systems.
The report emphasised that even when plug-and-play technologies become available, companies need integrators who understand their architecture and can resolve issues in real time. This is why the brokerage believes the services model will remain resilient.
AI Narrative Has HammeredIT Stocks
The brokerage attributes the sharp correction in IT stocks to what it calls a “battle of narratives” around generative AI. Tech companies such as Anthropic and Palantir have promoted new platforms that claim to automate tasks ranging from enterprise software migration to legacy code modernisation.
At the same time, the technology sector globally has experienced volatility. Several SaaS companies, including Salesforce, Workday and Adobe, have witnessed significant market-cap erosion over the past year as investors reassess the impact of AI.
The pessimism has spilt over into Indian IT stocks. The Nifty IT index has dropped around 20 per cent so far this year, while midcap IT firms have fallen roughly 25 per cent. Individual companies such as Coforge and Hexaware have seen declines of 30–40 per cent despite relatively stable operational performance.
Source: India Latest News, Breaking News Today, Top News Headlines | Times Now
