During its annual GTC developer conference in San Jose, California, Nvidia said the revenue opportunity for its artificial intelligence chips may reach at least $1 trillion through 2027. CEO Jensen Huang unveiled a new central processor and an AI system built on technology from Groq – a chip startup from which Nvidia licensed technology for $17 billion in December.
“The inference inflection has arrived,” Huang said. “And demand just keeps on going up,” he added.
Wall Street ended higher after Nvidia’s announcements, with the S&P 500 climbing 1% to end the session at 6,699, its strongest one-day gain in over a month. Tech-heavy Nasdaq gained 1.22%, while the Dow Jones Industrial Average rose 0.83%.
Indian IT stocks had seen significant decline earlier this year when Anthropic launched plug-ins for its Claude Cowork agent, which could automate tasks across legal, sales, marketing and data analysis departments. Some analysts sounded the alarm on the need for these IT service companies to gradually reduce staff as cheaper and faster AI takes over.
Additionally, investors are also eyeing the outcome of the US Federal Reserve’s FOMC meeting later this week. The outcome of the meeting will likely impact investor sentiment around IT stocks as these Indian companies derive a significant portion of their revenue from the US market.
Coforge shares declined around 6%, while heavyweights Wipro and Infosys, along with Mphasis, LTI Mindtree and Persistent Systems fell more than 2% each. Most of these stocks have hit fresh 52-week lows today.Tata Consultancy Services (TCS) and HCL Technologies shares dropped nearly 2%, and Tech Mahindra shares were down over 1%, pushing the Nifty IT index down over 2% to emerge as the top sectoral loser on NSE.
Earlier, Nuvama in its note said that the sharp correction in IT stocks seen since the beginning of the year, due to expectations of AI-led disruption in the sector following back-to-back AI tool launches by Anthropic, has made valuations attractive.
“Reports of my death are greatly exaggerated,” Nuvama said, citing Mark Twain’s quote as perfectly explaining the current situation of the IT sector.
“Given the advent and adoption of Gen AI, obituaries of the Indian IT services industry are being written all around. The concerns have been amplified by the sharp stock reactions, first with global SaaS and now with IT services companies,” it said.
Nuvama sees no existential threat from Gen AI and believes that the requirement for a system integrator, which can customise an enterprise’s plug-and-play software inputs and outputs as per its requirements, will always exist.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)