AI Rout Hits Tech Valuations

Global technology counters tumbled after Apple erased nearly $200 billion in market capitalisation, sparking a wave of risk aversion that swept into Indian IT. Investors are rapidly repricing the sector as artificial intelligence threatens to upend long-standing services models.

The Nifty IT gauge slid close to 5%, with Infosys, Tata Consultancy Services, HCLTech and Wipro among the biggest drags. Mid-caps were not spared as traders mirrored overnight weakness in US markets.

Driving the sell-off is growing unease around agentic AI. Unlike earlier tools, these systems can complete entire processes, raising the prospect of fewer billable roles. For firms whose revenues scale with headcount, the implications are profound.

Clients are also expected to renegotiate contracts toward outcome-based structures. While potentially healthier over time, the interim adjustment could disrupt visibility and margins.

Another trigger is valuation. After last year’s AI-fuelled rally, many names were trading at premiums that left little room for disappointment. In a cautious macro environment, investors are quick to trim exposure where earnings pathways look uncertain.

Layoff announcements at giants such as Amazon and Salesforce reinforce the belief that automation is moving from theory to execution. Still, some strategists argue panic may be outrunning fundamentals. They see opportunity in quality players able to pivot toward platforms, productivity gains and differentiated IP.

Tech has survived multiple reinventions. This cycle’s defining variable is pace—and the market is racing to identify tomorrow’s winners.