What is the news?
Due to Artificial Intelligence (AI) technology, there is a possibility of major changes in the tech sector. Many experts believe that this will have a positive impact on the tech sector, but many people also believe that it could lead to large-scale job losses and other negative impacts. Due to these apprehensions, there is a decline in the shares of tech companies in the Indian stock market.
Impact on earnings and increasing investment pressure
Investors fear that the increasing use of AI may gradually reduce the demand for traditional IT services. If companies are left behind in adopting new AI models in time and making them commercially successful, their earnings can be directly impacted. Along with this, huge investments, research expenses and infrastructure costs are increasing in AI technology, the benefits of which are not immediately visible.
Valuation high, growth likely to be low
Analysts say shares of many big IT companies are already trading at high valuations, which further increases the risks. If the earnings pace remains slow in the coming quarters or the order book does not strengthen, these stocks may fall further. Brokerage firm Jefferies has also warned that the valuation of the sector may fall much below the current level.
Regulations, data security and global uncertainty
The fear of data security, privacy and strict government rules related to AI is also increasing concerns in the market. In many countries, new laws and guidelines are being prepared to control the use of AI, which may increase additional responsibilities and legal pressure on companies. Apart from this, global economic slowdown, weak demand from foreign clients and fluctuations in the dollar have also kept the tech sector under constant pressure.
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