Market dynamics for Indian IT stocks are shifting as the sector navigates a high-stakes transition between global AI-led rallies and local volatility. Recent record earnings from Nvidia have provided a critical floor for market sentiment, while breakthrough tools from AI startup Anthropic continue to challenge traditional service models. Nvidia Records and Sector Support Nvidia reported a monumental fourth quarter with revenue hitting $68.1 billion, a 73% increase year-over-year. This surge was primarily fueled by record Data Center revenue of $62.3 billion. For the full fiscal year 2026, the chipmaker's revenue reached $215.9 billion, marking a 65% rise. This performance has reignited confidence in the global AI infrastructure cycle, which serves as a long-term growth driver for Indian firms providing AI implementation and integration services. AI Disruption and Market Correction The Nifty IT index has faced significant pressure, dropping approximately 21% in February 2026. This marks the steepest monthly decline for the sector in over 23 years. The sell-off was triggered by the debut of Anthropic’s "Claude Code" and "Claude Cowork" agentic AI tools. These platforms have demonstrated the ability to automate complex coding tasks and back-office functions, leading to fears that the traditional labor-arbitrage model—worth over $200 billion annually in exports—could be structurally impaired. Performance of Key Players Despite the broader index slump, individual stock performance reflects varying degrees of resilience based on AI integration: - TCS and Infosys have seen declines of roughly 19% to 21% this year as investors weigh their high exposure to application services. - Wipro has faced a steeper correction of 24%, while HCLTech and Tech Mahindra have dropped 18% and 16% respectively. - Mid-tier firms such as Coforge and Persistent Systems are being monitored closely as they attempt to pivot toward higher-margin AI consulting. Strategic Pivot and Monetization The industry is moving from experimental pilots to scaled execution. Nasscom projects Indian tech revenue to reach $315 billion in FY26, with a growth rate of 6.1%. AI-specific revenue is expected to contribute $10–12 billion of this total. Major firms are already reporting measurable AI income: - TCS has established an annualized AI revenue run rate of $1.8 billion. - Infosys reports that AI now accounts for 5.5% of its total revenue, generating $275 million. - HCLTech attributes 4% of its topline to AI-driven earnings, totaling $146 million. The Road Ahead Market analysts suggest the sector is entering a "Human + AI" phase where revenue growth is decoupling from traditional hiring. While headcount grew marginally by 1.35 lakh to a total of 5.9 million in 2026, the focus has shifted to domain-specialized roles. Total IT spending in India is forecasted to hit $176.3 billion by the end of the year, driven by a 20.5% surge in data center investments and a 17.6% rise in software spending. Strategic alliances, such as the recent partnership between Infosys and Anthropic to deploy Claude AI for enterprise clients, indicate that leading firms are choosing to integrate disruptive tools rather than compete against them. This transition is expected to redefine the industry’s profitability through platform subscriptions and outcome-based pricing models.