AI Shock Rocks Tech Stocks

Global technology shares slid sharply after Apple shed nearly $200 billion in market value, its steepest fall since tariff-driven volatility last year. The sell-off rippled across markets and triggered heavy damage in Indian IT counters, where investors are reassessing how artificial intelligence could reshape traditional services revenue.

The Nifty IT index dropped almost 5% in early trade, tracking weakness on Wall Street. Infosys, Tata Consultancy Services, HCLTech and Wipro led the retreat, while mid-cap technology names also faced intense pressure.

At the heart of the anxiety is the rise of agentic AI — systems capable of executing full workflows rather than merely assisting humans. For companies built on billing by the hour and workforce scale, automation raises fears of “seat compression,” potentially reducing revenue linked to manpower.

Analysts also warn that clients could accelerate a shift from time-and-material contracts toward outcome-based pricing. While efficient in the long run, the transition may temporarily weigh on growth as firms renegotiate engagement models.

Valuations added to the vulnerability. After a powerful rally in late 2025 on AI optimism, many stocks were priced for near-perfect execution. The current risk-off mood has encouraged investors to lock in gains, particularly where monetisation strategies remain unclear.

Reports of tens of thousands of global job cuts, including at Amazon and Salesforce, are being interpreted as evidence that automation is accelerating faster than expected. Some brokerages argue the reaction may be overshooting reality. They believe fundamentals remain stable and that extreme pessimism could set the stage for selective recovery.

Others caution that future gains will be uneven. As AI compresses delivery timelines, competitive advantage may shift to companies able to redesign offerings, protect margins and demonstrate credible platforms rather than labour scale.

The technology sector has weathered disruptions before. The difference this time is speed — and markets are still deciding who will adapt fastest.