Rs 26,340 crore added in minutes! Why HCL Tech, TCS and other IT stocks rallied up to 7%

Shares of HCL Tech, TCS, Infosys, Wipro and other IT stocks rallied up to 7% as global AI stocks came under pressure after Broadcom CEO Hock Tan and Intel CEO Lip-Bu Tan warned that access to capital and rising financing costs could emerge as major constraints on the AI boom, raising questions about the returns from massive investments in data centres and computing infrastructure.

In India, the Nifty IT index gained 3.3%, or 950 points, at the day’s high. TCS rose 7%, while HCL Tech gained over 5% following its Q2 results. Tech Mahindra, Infosys and Wipro advanced 3.2%, 2.7% and 3%, respectively. Within minutes of the opening bell, the index’s market capitalisation increased by Rs 26,430 crore.

Broadcom’s Hock Tan said capital could become a bigger constraint on AI expansion than shortages of semiconductors, memory chips or electricity. Intel CEO Lip-Bu Tan echoed the concern, flagging the rising cost of capital and the need for companies investing heavily in AI to demonstrate adequate returns.


The warnings come as investors reassess the sustainability of the AI-driven rally amid stretched valuations, intensifying competition and uncertainty over when heavy AI investments will translate into profits. Meanwhile, South Korea’s tech-heavy market plunged over 6% on Tuesday as the selloff in AI-linked stocks deepened.

OpenAI misses forecast

Further, OpenAI told investors last week that its annualised revenue for September was nearly $50 billion, lower than the figure it had indicated earlier, Reuters reported. At a separate event, the company had previously told investors that its September revenue run rate was approaching $70 billion.

The discrepancy largely stemmed from an effort to make a direct comparison with revenue figures from rival Anthropic, the Reuters report added.

HCL Tech Q2 results

IT major HCL Tech rallied as much as 5% after reporting 21% year-on-year (YoY) growth in consolidated net profit to Rs 5,132 crore for the second quarter of FY27. The company retained its FY27 EBIT margin guidance at 17.5-18.5%. It guided for constant-currency revenue growth of 2.5-4% for the company and 3-4% for services.

Revenue from operations in the reporting period increased 12% YoY to Rs 35,620 crore.

Sequentially, revenue grew 3%, while net profit rose 11%. In constant-currency terms, revenue increased 2.3% quarter-on-quarter and 2.6% YoY. The quarterly performance was driven by growth in services, strong bookings and rising traction in advanced AI-led work. New deal wins stood at $3.26 billion for the quarter.

Nomura raised its target price on HCL Tech to Rs 1,330 from Rs 1,310, implying 9% upside from current levels. The brokerage marginally increased its revenue growth estimates, expecting USD revenue to grow 3–5.9% YoY in FY27–28, compared with 2.7–5.1% earlier.

Nomura also raised its FY27 EBIT margin estimate by 50 basis points to 18%, while retaining its FY28 estimate at 18.3%. The brokerage cited AI-driven efficiencies, higher-margin advanced AI revenues and cost savings as margin tailwinds, partly offset by restructuring costs and the HPE Telco acquisition.

AI rout hits Wall Street, Asia

Asian markets tumbled on Tuesday, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 2.4% to a two-month low. South Korea's tech-heavy Kospi plunged 6%, triggering a five-minute halt in program trading, while Japan's Nikkei dropped 2.6% and Taiwan's benchmark index declined 2%.

US Nasdaq futures fell 0.77%, while European futures slipped 0.39%, pointing to a weak start for global markets. Kyle Rodda, senior analyst at Capital.com, attributed the decline across Asia to the sell-off in chip stocks on Wall Street overnight, which spilled over into regional markets, Reuters reported.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.