File photo for representational purpose.
Credit: Reuters Photo
Bengaluru: IT stocks witnessed heavy selling pressures on Wednesday, following concerns over AI firm Anthropic's, which is behind the AI assistant Claude, latest tool that could automate legal work.
Concerned over AI competition, software stocks were hit across Europe and the US. On Wednesday, Nifty IT plunged nearly 6 per cent, its steepest fall in six years.
"This steepest fall was amid investor worries over AI competition for software firms following Anthropic’ s legal tool launch for Claude AI. IT heavyweights Infosys, TCS, and HCLTech faced selling pressure as top losers," Nandish Shah, Deputy Vice President, HDFC Securities, said.
Infosys shares fell over 7 per cent and settled at Rs 1,535.90 on the BSE, TCS and HCLTech shares were down 6.95 per cent and 4.22 per cent, respectively.
Sumit Pokharna, VP Fundamental Research, Kotak Securities said Indian IT stocks slid in tandem with Wall Street, mirroring the overnight sell-off in US technology shares. "It may be premature to draw sweeping conclusions. The impact of such AI innovations is unlikely to be uniform across all IT verticals, and many segments could remain largely insulated in the near term. For now, the market reaction appears driven more by sentiment than by clear evidence of structural disruption," Pokharna said.
IT services firms are of the view that advanced AI tools are an opportunity and not a threat. Ashok Soota, Chairman and Chief Mentor, Happiest Minds Technologies said, "These developments represent a significant opportunity for Happiest Minds and not a threat."
He views Anthropic’s innovation as a catalyst for growth, reinforcing the essential role of IT services in guiding organisations through technological transformation.
"There is a lot of excitement around AI platforms and plugins, and rightly so since that they drastically lower the entry barrier for creating software. However, this does not reduce the need for companies like ours. In fact, it enhances the same," Soota said, adding that every major disruption, right from SaaS to cloud computing, has in fact expanded the role of IT services.
“This is exactly how digital disruption took center stage around 2010 and we were in the thick of it. Now, with our AI First program, we are once again at the forefront of this new era," he said.
During the company's Q4 earnings conference, Ravi Kumar S, Chief Executive Officer, Cognizant, said that any tech disruption will take away jobs of the past and create significantly more jobs in the future. He views such new AI tools as a tailwind to companies like Cognizant.
"I have a strong belief that the paradox of doing more for less will actually get you more. There is going to be new software written and it will not be around the microprocessor, but it will be around the LLM (large language models). And this new software is action-oriented, and has advanced reasoning," he said.