IT stocks staged a strong recovery on Thursday, with the Nifty IT index surging over 4% after experiencing a four-session decline that pushed the sector to a 52-week low of 25,699 on Wednesday. According to reports from The Economic Times, the rebound lifted sentiment across the technology sector, with Coforge leading gains at 5% while Infosys, Mphasis, HCL Tech and Persistent Systems each rose around 4%. The recovery came after the sector had shed nearly 7% over the previous four trading sessions. As per Business Standard, the Nifty IT index was the top gainer among sectoral indices, up 4% at 10:10 AM, significantly outperforming the 0.40% rise in the Nifty 50 at 24,096. The Nifty IT index climbed to 26,781, marking a significant turnaround from the recent decline and looking set to snap its four-session losing streak.
The recovery was significantly aided by comments from Palantir CEO Alex Karp, who criticized token-based pricing models in an interview with CNBC TV18. Karp stated that many enterprises believe they are "paying for tokens that create no value" while sharing proprietary intellectual property and business intelligence with frontier AI companies such as OpenAI and Anthropic. He described token-based pricing as a "wealth tax" that extracts value from enterprises without generating durable business outcomes, reinforcing Palantir's positioning around enterprise AI solutions. Karp told CNBC's "Squawk Box" that "something has gone completely wrong" with the current approach, adding that the prevailing enterprise mindset had become one of wanting to "chillax and waste my time with tokens." The comments lifted sentiment across global enterprise software stocks, with Palantir surging 7.7%, SAP gaining 5%, Salesforce advancing 4%, Accenture climbing 5.4%, ServiceNow rising 6.5% and Snowflake adding 2.6%. As per CNBC TV18, this rally provided additional momentum to the Indian IT sector's recovery.
Karp's comments come at a critical time when AI model costs continue to surge and companies are moving away from token-maxxing models to more return-on-investment approaches. "The basic view among enterprises in this country is I'm going to chillax and waste my time with tokens," Karp emphasized, highlighting the industry's shift toward models that are open-weight and considerably lower cost. He warned that "the AI industry should not take lightly the speed at which Chinese AI models are progressing," as models made in China are boosting their capabilities and could pose serious challenges to US labs. Karp also raised fundamental questions about AI governance, asking "Who owns the data? Are the prompts secure? Is this being transferred to you?" and noting that "If it was so valuable, and I can make you a billion dollars, wouldn't I say I'll make you a billion dollars and I want 30? Why are they charging for tokens if it's so valuable?" This week, Palantir entered a deal with Nvidia to use the latter's AI tools for building custom models for US government agencies, with Karp emphasizing that "technical customers want complete control over what they compute, their models, their data stack, and their alpha."
Karp's concerns extend beyond corporate AI adoption to encompass national security implications. "Controlling your weights is controlling your fate," Karp stated, emphasizing that "weights are where the learning lives" and represent the compressed residue of data, training, fine-tuning and repeated interaction. The Investing.com India analysis notes that "when you build on someone else's model, someone else's cloud, someone else's weights and someone else's pricing system, how much of the future business do you really own?" This question becomes particularly relevant for governments, defence organisations and critical infrastructure operators, where "control over the data, models and deployment architecture is not a procurement detail but part of national capacity." The analysis warns that "if AI becomes embedded in intelligence, logistics, battlefield decisions, cyber defence and critical systems, then control over the data, models and deployment architecture is not a procurement detail." These concerns align with growing interest in Chinese open-weight models that can be hosted internally and controlled by enterprises, potentially delivering better economic outcomes than expensive frontier models accessed through metered pipes.
The latest recovery comes amid challenging market conditions, with Nifty IT being the top sectoral loser in H1CY26, crashing 30% during the period compared to a 9% decline in the Nifty 50. According to Mint, over the last one year, the IT index has lost 29% with stocks crashing up to 40%. The sector's decline has been attributed to global macroeconomic concerns, weak discretionary spending by clients, earnings growth-valuation mismatch, and artificial intelligence (AI)-led disruption. The Nifty IT index hit an over three-year low of 25,699 on 1 July 2026, making Thursday's 4% surge particularly significant. As per Motilal Oswal Financial Services, despite valuations having corrected meaningfully, a sustained rerating is possible only after evidence that demand is improving, revenue growth is stabilising, and companies can show that AI-led opportunities have started to offset productivity-related headwinds. The Investing.com India analysis suggests that "the real AI race may not be between OpenAI, Anthropic, Google, Meta, DeepSeek and the rest. It may be between companies that use AI to compound their own institutional intelligence and companies that use AI to become more dependent on someone else's."
Despite the recent recovery, market experts remain cautious about the IT sector's prospects. Ajit Mishra, SVP of Research at Religare Broking, stated that "I don't see value in the sector at this juncture. What we're seeing today is more of a technical bounce that happens from time to time. I doubt the rally can sustain unless we hear encouraging commentary from management during the upcoming earnings season." According to Motilal Oswal, "We expect demand commentary to stay soft in Q1FY27, as macro, AI and geopolitical overhangs continue to weigh on discretionary spending and decision-making cycles. We build in tepid quarter-on-quarter growth across our coverage universe for Q1FY27, with the soft start likely extending into Q2FY27 as well." The brokerage firm emphasized that "Closely monitor management guidance. If management starts saying that the phase of 1-2% growth is behind them and they are confident of delivering stronger growth going forward, that could be the right time to invest." The Investing.com India analysis notes that "the next phase is audit. Who owns the system, who owns the data, who owns the weights, who owns the customer relationship and who captures the margin."
