AI Tailwind in IT Stocks: Time to Reboot Your Tech Portfolio?

After one year of sectoral underperformance, Indian IT is quietly undergoing its most radical overhaul since the cloud revolution, this time led by AI. The shift isn't cosmetic; it's existential. GenAI is reshaping services, rewarding agile midcaps and prompting investors to rethink legacy bets. The future of tech belongs to the AI-ready.

- By Abhishek Wani

Introduction: From Slowdown to Structural Shift

The Indian IT sector, long considered a rock-solid bet in investor portfolios, has seen a prolonged lull, with NIFTY IT delivering a negative 7.54 per cent return over the past year ending July 18, 2025. Post-COVID, demand for digital services surged, lifting tech stocks, until FY24 brought slower global growth, cautious enterprise tech spending, and muted hiring, leading to a sharp valuation correction and widespread pessimism.

Yet beneath the surface, a quiet revolution is taking shape, driven not by cost-cutting or generic digitization, but by Artificial Intelligence. No longer a buzzword tossed around in earnings calls, AI, particularly Generative AI (GenAI), is redefining how IT services are built, priced, and delivered.

For Indian IT, this could be the biggest pivot since the cloud boom. The real question now isn't whether the sector is back, but whether your tech portfolio is ready for what's coming.

This is a story of sectoral reinvention. It's about companies big and small, racing to stay relevant in an AI-powered world. And for equity investors, especially retail ones heavily invested in large-cap tech, it might be time to take another hard look at the tech corner of their portfolio. The next winners may not look like the old ones.

Sector Snapshot: Recovery Meets Reinvention