As concerns about AI continue to batter tech companies, Infosys, Wipro, and other IT stocks fall as much as 6%

Infosys, Wipro Tumble Up to 6% as AI Disruption Fears Deepen; IT Index Extends Losses

Mumbai: Shares of IT majors Infosys and Wipro fell up to 6% on Friday, extending their slide amid mounting concerns over artificial intelligence-led disruption.

The weakness followed a sharp overnight decline of as much as 10% in the American Depository Receipts (ADRs) of Indian IT companies after US-based AI firm Anthropic unveiled a new product capable of automating a broad range of professional tasks.

On domestic exchanges, Infosys dropped 5.51% to ₹1,310, while Wipro declined 3.37% to ₹211.70. The Nifty IT index marked its third consecutive session of losses, after plunging 5.5% on Thursday.

Selling pressure was visible across the broader IT pack, with stocks such as Coforge, Persistent Systems, LTIMindtree and HCLTech also witnessing weakness.

AI Tool Sparks Fresh Jitters

Anthropic, the company behind the Claude chatbot, said its new AI offering can automate several legal and enterprise functions, including contract reviews, non-disclosure agreement triage, compliance workflows, legal brief preparation and standardised responses.

The announcement has revived fears that rapid advances in automation could compress margins and weaken the competitive positioning of traditional IT services firms, many of which rely heavily on people-intensive delivery models.

Why Are Investors Rattled?

At the core of the market reaction is a growing belief that AI could fundamentally alter the competitive landscape for software and IT services companies, eroding both profitability and long-standing market advantages.

“The fear with AI is that there's more competition, more pricing pressure, and that their competitive moats have gotten shallower, meaning they could be easier to replace with AI,” said Thomas Shipp, head of equity research at LPL Financial, which oversees $2.4 trillion in brokerage and advisory assets.

“The range of outcomes for their growth has gotten wider, which means it's harder to assign fair valuations or see what looks cheap,” he added.

Industries once considered relatively insulated from automation — including legal services, data analytics and customer support — are now increasingly seen as vulnerable. If AI tools can automate these functions at scale, the $250-billion Indian IT services industry could face structural challenges.

Last week, global brokerage Jefferies termed the sharp sentiment shift a “SaaSpocalypse,” noting that investor perception has rapidly moved “from ‘AI helps these companies’ to ‘AI replaces these companies’.”

Jeffrey Favuzza from Jefferies’ equity trading desk described the mood as panic-driven. “Trading is very much ‘get me out’ style selling,” he said, according to Bloomberg.