According to reports from NDTV Profit, Rushabh Sheth, Co-Founder & Co-CIO at Karma Capital, delivered a candid assessment of India's AI landscape, warning that the country has 'missed the bus on AI' while highlighting where institutional capital can still uncover durable opportunities. Sheth noted that the accelerated pace of global technological innovation, led primarily by advancements in AI, is redrawing industry dynamics faster than many expected. While global markets, predominantly the US, have built deep moats in foundational artificial intelligence models, computing infrastructure, and core intellectual property, the domestic ecosystem remains skewed toward application layers and traditional IT services rather than foundational breakthroughs.
As reported by NDTV Profit, Sheth pointed out that a palpable sense of apprehension is creeping into investor circles due to a disconnect between elevated equity valuations and corporate performance reality. Aggregate earnings growth across Indian Inc. has remained tepid over the past few years, failing to provide the robust fundamental cushion that aggressive equity valuations typically require. This divergence between market expectations and ground-level earnings momentum has left investors noticeably cautious, with market participants increasingly focused on short-to-medium-term opportunities rather than committing patient capital to traditional multi-year growth narratives. According to Sheth, the broader market landscape has shifted toward tactical positioning rather than chasing pure structural growth, as investors seek to navigate the current period of subdued corporate earnings.
According to Sheth's assessment reported by NDTV Profit, the terminal value across multiple sectors is coming under severe pressure as businesses failing to adapt face declining cash flows in their outer forecast years. In discounted cash flow models, this represents the bulk of a firm's net worth. When tech obsolescence shortens business lifecycles or erodes competitive moats, hopes around indefinite cash generation unravel, forcing investors to recalibrate target multiples downward in sectors exposed to digital replacement. Sheth warned that technology disruption is compounding at a rapid pace and challenging the long-term sustainability of established business models, with India finding itself lagging on core technological breakthroughs.
Despite the overarching caution, as reported by NDTV Profit, Sheth emphasized that significant value is emerging in targeted segments where innovation meets large and addressable end-markets. He singled out health-tech as an especially compelling emerging sector, uniquely positioned to ride structural modernization, data integration, and localized clinical demand. Sheth also highlighted the robust underlying runway for traditional healthcare and the auto components sector, both benefiting from massive domestic scale and integrated global supply chains. According to Sheth, identifying companies with defensible moats within these expansive markets will remain central to outperforming a market transitioning through technological upheaval, as capital finds productive homes by pivoting toward these specialized, niche opportunities even amid macroeconomic headwinds and technological challenges.
