OpenAI $4B enterprise plan sends India IT stocks to 3-year low

OpenAI’s announcement of a more-than-$4 billion enterprise AI business coincided with a 3.7% drop in India’s Nifty IT index on May 12, pushing large service-focused firms to prices not seen since May 2023. The index logged its third straight session of losses. TCS, Infosys and Wipro were among the biggest decliners.

The new venture is aimed at enterprise customers-companies that currently hire Indian outsourcing firms to build, maintain and manage corporate technology stacks. Traders moved quickly to reprice the risk that AI-native competitors could automate portions of work performed by employees at service firms, prompting profit taking after recent gains.

Selling pressure was strongest on companies with high exposure to traditional services contracts. Trading and brokerage activity picked up as some shareholders locked in gains while others reassessed growth forecasts and valuations for outsourcing-based models. As of May 13 the index had not shown a meaningful rebound.

Prashasta Seth, chief executive of Prudent Investment Managers, attributed the share-price decline to a combination of macroeconomic uncertainty and concerns about disruption from AI, rather than to an immediate breakdown in company fundamentals.

Several large Indian IT firms have announced plans to integrate generative AI into their services, increase employee training and form partnerships with AI platform providers. TCS, Infosys and Wipro have committed publicly to embed generative AI into delivery models and upskill staff to use new tools.

The Indian IT sector is a major exporter and employer, accounting for a significant share of the country’s foreign exchange earnings and providing jobs to millions. Market participants are watching how quickly firms turn AI strategies into measurable revenue and whether enterprise customers shift work to AI-first providers. The mid-May market reaction centered on those questions.