CLSA Downgrades Leading Indian IT Firms Amid Growing AI Risk Concerns

CLSA downgraded five leading Indian IT firms—Infosys, TCS, Tech Mahindra, Wipro and Mphasis—cutting their target prices well below previous consensus estimates and moving the ratings to underperform, citing rising AI‑related execution risk and margin pressure.

Infosys shares slipped more than 4% after the downgrade, as the new CLSA target price fell short of market expectations and investors questioned how the company will fund AI initiatives without eroding profit margins.

TCS fell around 4% on the same session, with analysts noting that AI competition from global cloud giants could compress pricing, and that Citi has removed all buy calls on major Indian IT stocks, adding to market caution.

Analysts warned that earnings forecasts for the Indian IT sector may need downward revision, as AI‑driven cost pressures and shifting client budgets create uncertainty, prompting some investors to consider diversifying into non‑IT or overseas technology services.