IT Stocks: Shares of software and technology firms remained under pressure in overnight deals on Wall Street on Tuesday, February 17 as investor sentiment remained weak from growing fears of AI-driven disruption and diminishing expectations of a near-term interest rate cut by the US Federal Reserve. Concerns that rapid advances in artificial intelligence could upend existing business models continued to weigh heavily on the sector.
Several IT services stocks posted notable declines. EPAM Systems fell 2.5%, while Globant slipped 1.9%. Cognizant dropped 2.06%, and Accenture lost 1.94%. Among Indian IT firms listed in the U.S., Infosys ADRs edged up 0.20%, bucking the broader trend, while Wipro ADRs declined 2.14%.
Infosys, Tata Consultancy Services, Wipro, HCL Technologies and other IT stocks are likely to remain under pressure today, Wednesday, February 18, following the weakness in US tech stocks after witnessing recovery in the previous session.
Tech stocks have been facing renewed selling since last week after Anthropic introduced its Claude Cowork AI tool, designed to automate a wide range of workplace tasks. The launch sparked fresh worries about long-term demand for traditional software services and intensified last week’s global tech selloff. At the same time, optimism around monetary easing faded after U.S. economic data showed stronger-than-expected job growth in January, accompanied by a decline in the unemployment rate, reinforcing expectations that interest rates could remain elevated for longer.
Losses in some heavyweight technology names also weighed on the broader market. Alphabet was among the biggest drags, sliding 1.2%, as investors reassessed valuations amid rising competitive and regulatory risks linked to artificial intelligence.
Despite sector-specific pressure, U.S. equity benchmarks managed modest gains on Tuesday. The Dow Jones Industrial Average rose 32.26 points, or 0.07%, to close at 49,533.19. The S&P 500 added 7.05 points, or 0.10%, ending at 6,843.22, while the Nasdaq Composite advanced 31.71 points, or 0.14%, to 22,578.38.
The recent bout of volatility follows a sharp selloff last week, when fears that AI could disrupt business models triggered widespread declines across software firms, brokerages and trucking companies. That wave of selling pushed Wall Street’s three major indexes to their steepest weekly fall since mid-November, highlighting the fragility of market sentiment.
“AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model. Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Even ERP implementation, as highlighted by Palantir’s recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing. In the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact,” said Vinod Nair, Head of Research Geojit Investments.
Indian IT stocks
Indian IT stocks are likely to be in focus today, February 18 after the decline in tech stocks on February 17. However, the Indian IT stocks including Infosys, TCS, HCL Tech, and others recovered in the previous session with the Nifty IT index gaining over 2% in intra-day deals as investors bought on dips.
Assessing the outlook of the tech space. Citi has struck a cautious tone, flagging that AI-led disruption, combined with lighter domestic institutional investor positioning, could lead to compression in valuation premiums. The brokerage pointed to risks arising from an uncertain demand environment, intensifying competition, and the rapid expansion of global capability centres, which may increasingly bring technology work in-house.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
About The Author
