India IT set for fourth year of weak growth on geopolitics, AI risks
As HCL Technologies Ltd. and Tech Mahindra Ltd. unveil their latest reports, investors are keenly observing the situation, particularly given the looming threats posed by AI disruptions and restrained client expenditures. These factors are influen...
Growth is expected to be muted as customers remain cautious on discretionary technology projects, though recent results from Accenture Plc offered some encouragement that spending is shifting toward large AI-led transformation projects instead of simply drying up, according to Antique Stock Broking analysts.
On Thursday, TCS beat profit growth expectations, although sequential revenue growth was only 0.5% in constant-currency terms.
“The IT sector has sharply underperformed the markets in the last nine months primarily due to a negative narrative built by GenAI platform companies compounded by the Gulf war-related uncertainty,” Nuvama said. “We continue to believe the IT services model is here to stay and the GenAI disruption would only lead to bigger opportunities for them.”
The Trump administration’s latest visa restrictions mounts a new challenge for the sector, after the US said it would suspend an immigration program used by tech firms, mentioning HCL and TCS by name.
The NSE Nifty IT Index has dropped 27% this year, leaving the sector trading at its lowest valuation multiple since the pandemic.
In Taiwan, AI bellwether Taiwan Semiconductor Manufacturing Co. is due to give more insight after disclosing quarterly sales jumped 51%, lending support to the breakneck pace of the technology’s buildout. Still, investors reaction appears muted as they question how long AI spending can last amid rising debt levels.
