Global brokerage JPMorgan has characterized the recent IT sector selloff as driven more by panic than fundamental concerns. According to JPMorgan analyst Mark Murphy, the reaction has veered from logical concern into outright capitulation, with markets "overwhelmingly" focused on AI headlines while underweighting enterprise software resilience. The IGV tech-software ETF fell about 5%, taking the sector back towards levels last seen during the "peak tariff and DOGE fears" of early April 2025. The damage is now "very broad," hitting mega-caps and small-caps alike, with stocks like Cloudflare, Datadog, and Snowflake dropping "roughly 9-11%" in Tuesday's trade.
Despite a 6% decline in the Nifty IT index on February 4, DSP Mutual Fund remains committed to the IT sector. According to reports from CNBC TV18, Vinit Sambre, Head of Equities at the $25 billion fund, stated that the fund is "either equal weight or overweight in our IT sector." The fund's positioning comes as global technology stock pressure linked to artificial intelligence developments has rattled Indian IT stocks, with concerns around AI tools moving beyond support roles into direct automation. As per JPMorgan, this represents "an extreme example of how AI narratives can dominate price action," with basket trades and de-grossing adding fuel to the fire.
Sambre emphasized that recent global company commentary triggered market panic, but investors should first understand the real earnings impact before reacting. As reported by CNBC TV18, he noted that while AI may reduce pricing in some services, it could increase overall work volumes as companies modernize applications. The fund executive pointed out that investors need deeper analysis before concluding whether AI creates long-term risk or opportunity, with some developments potentially creating opportunities over the medium to long term. According to JPMorgan, the team describes itself as an "extreme bullish outlier" on AI since late 2022, reiterating that AI would "evolve at the speed of light" with important potential ramifications for the software landscape.
The selloff followed rising unease that artificial intelligence tools are moving beyond support roles into direct automation, intensified after Anthropic expanded its Claude agent with plug-ins for legal work, document review, compliance and enterprise workflows. According to CNBC TV18, the initial pressure was on Software as a Service firms, but worries soon extended to outsourcing and information technology services companies that depend on global technology spending. As per JPMorgan, the latest leg was triggered by Anthropic's launch of Claude Cowork plug-ins, which span legal, sales and marketing, finance and accounting, data analysis, productivity and search, effectively turning Claude from a text chatbot into an agent that can execute tasks across a user's Mac files and browser. The benchmark Nifty 50 remained mostly flat while the Nifty IT index declined nearly 6%.
Moshe Katri highlighted that Indian information technology services could have a meaningful role in the next phase of artificial intelligence adoption, particularly in integration work and preparing data. As reported by CNBC TV18, he noted that "the sector is very well positioned from the infrastructure side of AI, massaging the data, preparing it to basically get fed into those accelerators." However, he cautioned that these projects may take time to gather pace and translate into meaningful business. According to JPMorgan, while AI agents may take on work that has historically lived inside systems of record, the bank continues to advocate a barbelled strategy across value and growth software, emphasizing valuation discipline and resilient revenue streams.