Indian IT stocks fall to near three-year lows, OpenAI-related moves once again spark concerns in the AI sector

Source: Global Market Report

On Tuesday, influenced by OpenAI’s announcement of a new artificial intelligence project, concerns over the impact of AI on leading Indian IT companies resurfaced, driving Indian IT stocks to a three-year low.

The NIFTY IT index in India tumbled 3.6%, hitting its lowest level since May 2023; shares of Tata Consultancy Services, Infosys, HCL Technologies, and Wipro fell between 2.5% and 4%.

Analysts at HSBC stated in a Tuesday research report that the Q3 FY2026 earnings performance and new fiscal year guidance from top Indian IT companies have generally missed market expectations. They further added that the surging global expenditure in the artificial intelligence sector might squeeze the demand for traditional IT services.

Just one day before HSBC issued this warning, OpenAI announced the founding of a new company, backed by over $4 billion in funding, sending engineers to various organizations to explore application scenarios where artificial intelligence could achieve maximum effectiveness. This move marks the latest round of challenges from major AI companies targeting enterprise clients and the business model of Indian IT firms.

HSBC pointed out that unless the global fever for AI R&D, the pace of cloud capital expenditure growth, and the momentum of cloud business revenue gains slow significantly, it will be difficult for Indian IT stocks to attract capital for long positions.

Indian IT companies generate a significant proportion of their revenue from the North American market, making them highly sensitive to US economic uncertainty and trends in corporate technology spending.

Since the start of 2026, the Indian IT sector has remained under pressure. In early February, Anthropic’s launch of Claude Code triggered a sector-wide plunge, as the market broadly worried that the rapid iteration of generative AI would disrupt traditional IT and professional services demand.

So far this year, the Indian IT sector has accumulated a decline of 25.4%, making it the worst-performing sector in India; during the same period, India's Nifty 50 benchmark index has only fallen by 9.7%.