TCS, Infosys, HCL Tech down 5-7% after Anthropic’s AI automation tools launch.
AI automation leading to 50-70% fewer resources. TCS already cut 30K jobs; Amazon cutting 16K roles; Meta slashing 10%.
AI can now do tasks that IT companies used to bill clients for data analysis, reports, basic coding. If AI does the work, clients don’t need to hire IT companies.
IT companies used to grow 15-20% every year. Now maybe 5% growth or less. Feel like they should really come up with really something good or extra extraordinary.
How many of you feel really IT is going to grow in the near time? Can someone tell is it really a good time to buy IT? or wait till there is a consolidation?
IT stock have no return last 4 years , last four years also its consolidation , nothing cannot change dramaticely , when deep seek AI launch in china , NVIDIA and other IT stock fell 15% next day rebound normally they are trading , i buy TCS 5 qty @3020, max allocation IT for 2%
Let’s wait and see how it performs, AI companies keep making these tall claims but even a simple data entry process that requires near 100% accuracy cannot be automated away using something that will never get to that level of accuracy.
One possibility is another company that develops similar automation,
which enables the other company to deliver the product/services for a lower cost,
and thus underbids the project and poaches the customer.
Another possibility is the customer develops such expertise in-house,
and is no longer interested in purchasing a product/service
that they previously relied on a 3rd-party IT provider.
What I’m really wondering is on one hand there’s a strong belief that AI will ultimately help IT companies grow. That said, when AI tools become more capable, do clients actually reduce their overall IT spending, or do they simply reallocate budgets toward newer service areas such as AI integration, transformation, and optimisation?
I wouldn’t think of them as the Stalwarts they once were, but rather as Slow Growers (growing just above inflation) that can be bought for dividends. When in doubt, go for a Sector ETF. We can buy them without worry when the price drops especially in IT and it leaves us with little regret if the price soars.
PS: I borrowed Stalwarts and Slow Growers from One Up on Wall Street.
I have less than 1% exposure to IT myself, even though I work in a software house as a foot soldier no insight on AI yet I use more for company analysis than improving my work
Not a financial advisor!
