Indian IT Stocks Fall on AI Disruption Fears: Nifty IT Down 20% as TCS, Infosys, HCLTech Share Prices Drop

Among the major laggards, Coforge fell 5.22%, Persistent Systems declined 5.47%, HCLTech slipped 4.46%, and Mphasis dropped 2.2%. Large-cap IT names were also under pressure, with Infosys down 3.53%, HCLTech falling 4.46%, and TCS declining 3.53%.

Wall Street Rout Triggers Global IT Selloff

The weakness followed a sharp fall in US equities on Monday, February 23. The Dow Jones Industrial Average dropped 821.91 points, or 1.66%, to close at 48,804.06. The Nasdaq Composite declined 1.13% to end at 22,627.27, while the S&P 500 shed 1.04% to settle at 6,837.75, slipping back into negative territory for 2026.

The 30-stock Dow was dragged lower by IBM, which plunged 13% after Anthropic unveiled new programming capabilities for its Claude Code product. The development intensified fears around artificial intelligence-led disruption in the software industry. Microsoft fell 3%, while CrowdStrike tumbled nearly 10%, reflecting broader pressure across technology stocks.

Beyond software, AI-related concerns have also affected trucking and logistics stocks, commercial real estate, and financial services companies. Additionally, US President Donald Trump’s decision to raise global tariffs weighed on overall market sentiment.

AI Disruption Concerns Reshape IT Outlook

Artificial intelligence is increasingly being viewed as a structural disruptor to traditional IT services models. There is a growing perception that AI could shift the business mix toward consulting and implementation while reducing the share of managed services. Such a shift could increase cyclicality and require changes in talent structures and operating models, adding to near-term uncertainty.

India AI Impact Summit 2026: Industry Leaders Respond

At the India AI Impact Summit 2026, industry leaders addressed mounting concerns over AI’s impact on SaaS and enterprise services. The collective view was that AI agents will reshape business and operating models, but will not render them obsolete overnight.

Arundhati Bhattacharya, Chairperson & CEO of Salesforce India, cautioned against oversimplification amid sharp market reactions. "Markets will say a lot of things, and not all of it comes true," she noted.

"When you talk about the SaaS model, it's not only about vibe coding or creating an application; it's about understanding workflows, recognising customer pain points, and ensuring you address them. It's about observability, governance, auditability, and adoption," she said.

TCS CEO Sees Expansion Ahead

K Krithivasan, Chief Executive Officer of Tata Consultancy Services, highlighted a fundamental shift in the role of engineers. "We are entering an era where the role of the software engineer is shifting toward high-level architecture and rigorous validation," he said.

While AI promises significant productivity gains, he stressed that enterprise adoption requires substantial groundwork, including data rationalisation and application modernisation. Instead of contraction, he foresees expansion. "We don't envision a shrinking of the sector, but rather a massive explosion in the volume of what can be produced and the complexity of the problems we can solve."

HCLTech Focuses on Enterprise-Grade AI

C Vijayakumar, Chief Executive Officer and Managing Director of HCL Technologies, asserted that enterprise AI adoption demands more than generic models. "Large language models and foundational models cannot yet be applied most efficiently to enterprise use cases," he said.

He indicated that HCL Technologies is building intellectual property and specialised services, including physical AI and agentic AI, to bridge that gap and scale adoption, even if it means proactively evolving existing business lines.

Infosys Flags $300 Billion Opportunity

Infosys Chief Executive Officer Salil Parekh underscored the scale of the opportunity ahead. "AI is creating a $300 billion services opportunity by making the 'impossible' economically viable."

The discussion comes amid growing unease over SaaS firms’ business models, as AI agents threaten to automate core workflows, reduce reliance on traditional software subscriptions, and pressure margins. The shift toward outcome-based AI solutions has intensified concerns about pricing pressure and disruption from AI-native competitors, keeping IT stocks under sustained pressure.