IT stocks back in favour as AI jitters batter global chip shares worldwide

India’s information-technology stocks outperformed global semiconductor shares by the widest margin on record this week, with analysts expecting the trend to continue as the artificial-intelligence trade wobbles.

An index of India’s biggest software exporters surged almost 12 per cent during the week compared with a 7.2 per cent drop in an MSCI gauge of global chip stocks. AI shares have tumbled in recent days as slowing revenue growth, worries about infrastructure financing, and fears of rate hikes have fueled concerns that the companies are overvalued.

“If the correction in semiconductors gains momentum, as it has this week, foreign investors will start looking at Indian IT stocks,” Rajat Agarwal, an Asia strategist at Societe Generale SA in Bengaluru, tiold Bloomberg. “We could probably see the end of de-rating in these companies, which itself should bring stability.”

There have also been some positive signs for IT shares. HCL Technologies raised its full-year sales growth guidance this week, while Ireland-based Accenture Plc said it expects to increase the pace of revenue expansion and profit margins through 2029.

India’s largest IT firms were swept up in a global selloff in software stocks earlier this year, as some investors feared that AI could disrupt their business models. Slowing revenue growth amid geopolitical concerns and rising client demand for lower prices also sapped investor sentiment.

On Friday, Nifty IT Index gained 3.9 per cent to its highest level since February 20. The gauge has climbed 24 per cent from its July low, but it’s still down about 16 per cent this year, putting it on track for its worst annual performance since 2022.