Shares of IT companies have made a great comeback in the stock market this week. Until recently, fears of artificial intelligence (AI) and weak earnings led to a sell-off in these stocks, but good quarterly results and declines in AI companies’ stocks have changed investor sentiment. This has increased the total market cap of IT sector companies by around ₹ 2.60 lakh crore in a week. The IT index rose nearly 12% and was the best performing index of the market this week.

Bullish from Tech Mahindra to TCS

Tech Mahindra was at the forefront of this boom. The company’s stock has increased by more than 16 percent in a week. Shares of Wipro rose around 13%, while shares of TCS, Infosys and HCL Technology gained around 12%. Earlier this year, many investors, including foreign institutional investors (FIIs), stayed away from IT stocks. At the time, investment in AI-related companies was increasing and concerns were being expressed about earnings and demand for Indian IT companies.

The atmosphere changed as the shares of AI companies fell

Shares of major companies related to AI and semiconductors in the US saw a sharp decline this week. The world’s 20 largest AI and chip companies lost more than $1 trillion in market cap this week, according to the report. Investors are concerned that companies are not earning as much as expected despite spending heavily on AI. Fears of interest rate hikes, cost of raising funds for AI projects and increased competition also undermined market confidence.

What will be the movement of IT stocks in future?

According to experts, IT shares may get support in the near future due to better results and increased investor interest. However, the pace of AI adoption will be critical to IT companies’ earnings and stock prices over the next two to three years. Some experts believe that investors may book profits after the recent rally. In such a situation IT shares may fluctuate. That said, there are signs of improvement in this sector, but further progress will depend on company results and actual earnings from AI.

Disclaimer: This article is for information only and should not be considered as investment advice in any way. SPPU INFO advises its readers and viewers to consult their financial advisors before taking any money related decisions.