Why Are IT Company Stocks Crashing?

Indian IT giants like Infosys, TCS, Wipro, and HCL Tech have seen sharp declines of 5-8% in early February 2026, wiping out nearly Rs 1.9 lakh crore in market value. This sell-off marks one of the sector's worst weeks in months.

Trigger: Anthropic's AI Tools Launch

The plunge accelerated after Anthropic unveiled advanced AI productivity tools like Claude Cowork on February 2-3, 2026. These tools automate core outsourcing tasks—document review, data analysis, coding, and workflow management—previously handled by Indian IT firms. Investors fear this "Saas-pocalypse" erodes the traditional low-cost labor model, replacing human services with efficient AI agents.

Global Tech Sell-Off Spillover

Overnight Nasdaq drops (down 1.4%) amid U.S. software stocks like ServiceNow (-7%) fueled risk-off sentiment. Indian IT, heavily reliant on U.S./European clients, amplifies these cues. ADRs for Infosys and Wipro fell 3-6%, dragging Nifty IT index lower by 6.8% weekly.

Opportunities Amid Chaos

While mid-caps like Coforge (-3.8%) suffered most, niche AI adopters (e.g., LTIMindtree) show resilience. Firms pivoting to AI implementation services may gain as clients fund transformations despite caution. Experts call it sentiment-driven, not structural—watch Q4 earnings for clarity.

Citations:

[1] Infosys, TCS sink up to 8%: Why are IT stocks falling today?

[2] Indian IT stocks crash: Infosys, TCS, Wipro down up to 7%

[3] IT shares in focus as ADRs slide overnight; why are tech

[4] AI angst wipes $22.5 billion off Indian IT stocks in worst

[5] Software stocks plunge amid AI-led disruptions

[6] Indian IT Firms Hit Hard by Global Software Stock Selloff

[7] U.S. Stocks Fall as Tech Sells Off; Gold Gains

[8] These overlooked indicators say tech stocks may not lead

[9] Market falls after Budget 2026: What spooked investors

[10] Four Possible Market Pitfalls to Watch for in 2026