Infosys, HCLTech, other IT stocks gain on Nvidia’s likely price hikes. Are AI bubble worries coming true?

Indian IT stocks traded in the green on Monday as reports on Nvidia’s possible price hikes surfaced, which may have spooked investors about a possible AI bubble going bust, boosting the shine of India’s much-touted IT stocks that analysts claim to enjoy an ‘anti-AI’ advantage.

Some of Nvidia's largest customers have been informed that prices of servers containing its AI chips will rise by more than 15% in ‌many cases ⁠on the back of soaring ⁠memory chip costs, Bloomberg News reported on Saturday.

The price hikes will take effect on systems shipped in early 2027 and will affect systems powered by Nvidia’s flagship Vera Rubin and Grace Blackwell chips, the report said, citing people familiar with the matter. The extent of the increase will depend on the chip generation and memory configuration, they added.


This increases worries over the massive AI frenzy, with analysts questioning the excessive spending by hyperscalers to take a lead in the race. The tech giants are massively increasing their spending on AI to take a lead in what they describe as the next big tech revolution. While enterprises keep integrating AI, analysts have been sounding the alarm over the rising debt levels resulting from the spending.

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India’s anti AI advantage

IT stocks on Dalal Street have seen sharp upswings and downswings recently. Earlier this year, the sector witnessed a sharp selloff after breakthroughs by AI startups fuelled concerns about potential disruption to the traditional IT services business model. Later, a sharp selloff in global tech leaders proved to be a blessing in disguise for Indian IT stocks, which emerged resilient amid the global tech rout.

HSBC said India can serve as an “anti-AI” diversifier as sharp swings in technology-exposed markets encourage foreign investors to broaden their portfolios. HSBC strategists Prerna Garg, Herald van der Linde and Yogesh Aggarwal said in a report that AI-rotation outflows from India have “largely played out.”

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As global AI giants saw a sharp downturn in share prices, IT stocks on Dalal Street jumped. The Nifty IT index has surged around 7% over the past 30 days. Today, the index gained more than 1% to hit the day’s high at 30,893. Infosys and HCL Technologies shares gained more than 1% each.

Why CLSA remains cautious

While AI jitters continue to keep IT investors on the edge, CLSA downgraded several heavyweight stocks and revised their target prices, although it remains bullish on several mid-tier IT vendors. CLSA in a recent note highlighted that Q1 earnings was a mixed bag for Indian IT and global peers. Basic excel math does imply that AI volumes could supersede deflation by FY30, taking US$ revenue growth from low to mid-single digits, the international brokerage said.

Given the long gestation time and limited potential upsides, CLSA downgraded its rating on the shares of Tata Consultancy Services (TCS), Infosys and Tech Mahindra to ‘Hold’, and that on Wipro and Mphasis to ‘Underperform’, due to structural concerns.

Also read | IT crash ahead? CLSA downgrades TCS, Infosys, Wipro, other stocks; revises target prices. Here's why

(With inputs from agencies)

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