Tech Stocks Extend Losses Amid AI Anxiety and Fed Rate Cut Uncertainty
Technology shares remained firmly in negative territory on Friday, extending a sharp decline as dual concerns over artificial intelligence disruption and diminishing expectations for an early interest rate cut by the US Federal Reserve continued to dampen investor confidence across the sector.
Nifty IT Index Slumps Over 4.5% in Broad-Based Selloff
At 9:50 AM, the Nifty IT index witnessed a significant drop of 4.59%, shedding 1,520 points to trade at 31,639. This movement reflected widespread weakness across technology counters, with major players experiencing substantial declines.
Key stock performances included:
- Infosys falling 85 points, or 6.13%, to 1,299 on the National Stock Exchange
- TCS declining 4.77% to 2,619
- HCLTech dropping 4.48%
- Wipro decreasing 3.64%
- Tech Mahindra trading lower by 2.66%
Mid-Tier IT Companies Also Face Significant Pressure
The selloff extended to mid-tier technology firms, with several notable declines:
- Coforge tumbled 1,345 points, representing a 5.32% drop
- Persistent Systems lost 3.16% to reach 5,279
- LTIMindtree slipped 3.62% to 5,023
Continuing Weakness Following Thursday's Performance
This downward movement comes just one day after the 10-stock Nifty IT index emerged as the worst-performing segment on Thursday. The index plunged close to its lowest level in nearly ten months and continues to be the weakest sector for the current year.
The weakness in Indian markets mirrored declines in US trading sessions, where American Depository Receipts of Infosys and Wipro retreated sharply for a second consecutive session. Infosys ended down as much as 10% at $14.21 on the New York Stock Exchange, while Wipro shed 5% to finish at $2.28.
Anthropic Announcement Intensifies AI Disruption Concerns
The immediate trigger for the latest wave of anxiety appears to be a new offering from Anthropic, the company behind the Claude chatbot. Market participants view this development as another reminder that artificial intelligence adoption could intensify competition, squeeze profitability, and erode the traditional competitive advantages enjoyed by IT services companies.
According to VK Vijayakumar from Geojit Investments, "Tech stocks, reeling under the Anthropic shock, are unlikely to recover soon." This sentiment reflects broader market apprehension about AI's potential impact on the technology sector.
Analysts Highlight Significant Revenue Risks
Some market observers have raised alarm about the potential scale of disruption, suggesting that as much as 40% of revenue could be at risk if automated systems take over work traditionally handled by human employees. Brokerage firm Motilal Oswal has also flagged concerns, arguing that artificial intelligence may render conventional software development and testing assignments less critical in the future.
However, analysts recommend monitoring potential strategic partnerships over the coming three to six months that could pave the way for fresh AI-led business opportunities by mid-2026.
Traders anticipate the current pressure to radiate across the broader technology universe, keeping stocks such as Coforge, Persistent Systems, LTIMindtree, and HCLTech firmly in focus as the sector navigates these challenging market conditions.
