Indian software stocks continue to decline amid concerns over AI disruption

Glonghui, February 13th｜Due to investors' concerns that artificial intelligence may disrupt their business models, and continued avoidance of this sector, Indian software company stocks fell on Friday. This month, Indian software service providers and their global peers (including IBM, Accenture, and Cognizant Technology) have all experienced significant sell-offs due to worries about AI disruption. In a report dated February 12, Citigroup analyst Scott T Chronert wrote: “We believe the recent performance of the software services sector reflects the market’s concerns over AI disruption, leading to a compression in terminal valuation multiples.” Although short-term fundamentals remain solid, the market is already pricing in a decline in future profit margins and lower terminal values. India’s two largest software exporters—Tata Consultancy Services (TCS) and Infosys—led the decline, both dropping more than 6% at one point before recovering some losses. The India Nifty IT Index fell 5.2%, hitting its lowest intraday level since April 7 last year; the index has plunged 16% this year, erasing all of its approximately 13% gains for 2025.