The Indian IT sector is experiencing significant pressure from artificial intelligence disruptions, with global investors reassessing traditional IT services companies. According to The Financial Express, IT bellwether Accenture's trimming of sales growth guidance for 2025-26 and management commentary about near-term pressure overhangs on Indian IT majors has created market uncertainty. The Nifty IT index was the worst hit among sectoral indices, down nearly 2% on Tuesday, with all constituents trading lower except Oracle Financial Services, which rose over 1%. Shares of major IT companies including Infosys, Tata Consultancy Services, Tech Mahindra, Wipro, LTM, and Mphasis fell 2-3% during the session. As per Nirmal Bang research analyst Shubham Dalia, IT companies' revenue compression is at a faster pace and the April-June results of these companies are likely to be subdued, with the sector facing AI-related pressure for the entire year unless positive indications emerge in June quarter results.
Global investors are increasingly focusing on mid-cap Indian IT companies driving AI-led revenues, with firms like Coforge, Cyient, and Persistent Systems expanding through strategic acquisitions and AI innovations. According to reports from The Financial Express, investors are looking beyond traditional large IT services companies like Infosys, HCL Tech, and Wipro, as AI-based revenue remains a small portion of their total revenues. For instance, HCL Tech's AI-based revenues represent only 4.2% of its total quarterly revenue, with Advanced AI Revenue at $155 million against total revenues of ₹33,981 crore in March 2026 quarter. However, the sector faces challenges as HCL Tech's advanced AI segment can scale up to $1 billion over FY27–FY28 but at only 4% of revenue now it cannot offset deflation or completely offset pressure on traditional deals, as noted by HDFC Securities.
Coforge demonstrated strong quarterly performance with revenues growing 1.7% q-o-q to $489.1 million (₹4,450 crore) in March 2026 quarter while net profit surged 125% q-o-q to ₹666 crore. As reported by The Financial Express, the company completed its strategic acquisition of California-based Encora in late April 2026 for an enterprise value of $2.35 billion (₹22,000 crore). The combined entity is projected to generate $2.5 billion in annual consolidated revenues, with AI-led engineering, data and cloud services contributing $2 billion annually in FY27.
Cyient reported consolidated revenues growth of 7.2% y-o-y on constant currency basis to ₹1,927 crore in March 2026 quarter, though net profit declined 65% y-o-y to ₹65.5 crore due to legal expenses related to the Kinetic Technologies acquisition. According to The Financial Express, the Hyderabad-based company strengthened its AI capabilities by acquiring California-based TAO Digital Solutions in May 2026 for an enterprise value of $218 million. TAO Digital Solutions generated revenues of $79.1 million during calendar year 2025, positioning Cyient as a leading custom chip company serving over 300 global customers across aerospace and mobility sectors.
Persistent Systems achieved quarterly growth of 3.4% q-o-q to ₹4,055.9 crore in March 2026 quarter with net profit increasing 20.5% q-o-q to ₹529.3 crore. As reported by The Financial Express, the Pune-based company expanded its AI presence through the acquisition of Estonia-based Concise Systems OÜ, which generated annual revenues of Euro 11.6 million (₹125 crore). The company trades at a consolidated P/E ratio of 39.6 times, with the stock remaining broadly flat at ₹4,840 on Tuesday.
According to The Financial Express, mid-cap IT stocks with AI focus are trading at premium valuations compared to traditional IT services companies. Persistent Systems trades at 39.6 times P/E, Coforge at 38.8 times, and Cyient at 20.9 times, significantly higher than major US tech companies like Microsoft (21.9 times) and Oracle (30 times). The article suggests these stocks could be added to watch lists for 2026 to monitor whether expected AI revenue ramp-ups align with market expectations. Investors are advised to consider these premium valuations alongside the companies' AI-driven growth strategies and strategic acquisition benefits, while the current market environment shows pharmaceutical and healthcare companies gaining the most with Nifty Pharma up almost 2% as investors rotate into defensive sectors away from AI-focused technology stocks.
