Jefferies Downgrades Indian IT Stocks Citing AI-Driven Business Model Changes

Indian IT stocks, including Infosys, Wipro, Tata Consultancy Services, and HCLTech, declined following Jefferies' downgrades citing concerns over artificial intelligence (AI) disrupting the sector. Jefferies cut target prices by up to 33%, lowered earnings estimates by 1-4%, and shifted ratings from 'buy' to 'hold' or 'underperform'. The brokerage highlighted AI's impact on business models, increasing cyclicality and requiring new talent and operating approaches. Despite a 16% year-to-date rise, Jefferies sees more downside risk ahead, favoring mid-sized IT firms for growth potential.