# Generative AI and Soft Demand Put Three IT Stocks at Risk of Losing Up to 27%

> A major brokerage has cut ratings on three big IT names and trimmed price targets across the sector by as much as 27%, blaming generative AI and weak demand for the squeeze.

**Type:** article · **Category:** Market · **Published:** 2026-06-24 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/eai-ki-mara-aura-susta-dimanda-ina-tina-it-sheyaron-men-27-taka-giravata-ka-anumana-2679 · **Language:** English
**Tags:** JPMorgan, IT stocks, HCL Technologies, Wipro, Tata Technologies, Generative AI, stock market, rating downgrade

It was a sobering Wednesday for the Indian IT pack. A fresh sector note from JPMorgan downgraded three major IT names and pulled price targets down by as much as 27% across the board, with the brokerage warning that the worst may not be over yet.

The report points to two big problems weighing on Indian IT right now.

## The first threat: AI
The biggest worry is artificial intelligence. Generative AI tools like ChatGPT are quietly eating into exactly the kind of work, coding, testing and maintenance, that Indian IT firms have built their businesses on for decades.

JPMorgan calls this "GenAI-led deflation," and reckons we are only two years into the shift. In other words, there is more pain still to come.

## The second threat: global uncertainty
The second driver is the uncertainty hanging over the world economy. Geopolitical tensions and tariff anxieties have made enterprise clients in the US and Europe cautious. They are still spending on technology, but a larger slice of that budget is flowing toward AI and cloud rather than traditional IT services.

That is why Indian IT revenue growth has been stuck at just 2 to 3% for three years straight.

## Growth assumptions slashed
JPMorgan has revised its medium-term growth assumptions downward. It now expects large-cap IT firms to grow around 3%, down from 4% earlier, and mid-cap companies at 5%, down from 6%. The brokerage has also made a 25% cut in target price-to-earnings multiples. It does not expect large IT services companies to return to their long-term average growth rates of 7 to 8% in the medium term.

## Who takes the hardest hit
HCL Technologies took the sharpest cut, with its target lowered 27% to Rs. 1,000 from Rs. 1,370. At the current price of around Rs. 1,109, that implies another 10% downside from here.

Wipro was downgraded too, with a new target of Rs. 160, down from Rs. 200. The brokerage is forecasting near-zero revenue growth for FY27, a fairly grim outlook for one of India's biggest IT companies.

Tata Technologies saw a smaller target cut of just 4%, to Rs. 540. Yet the implied downside is the sharpest of the three, nearly 29% from where the stock trades today at Rs. 759.

## The names still backed
On the other side, JPMorgan kept its 'Overweight' rating on a few stocks. TCS carries a target of Rs. 2,400, suggesting a 17% upside, while Infosys has a target of Rs. 1,200, also pointing to a 17% upside. Mphasis was given a target of Rs. 2,600 with 16% upside potential, and Cyient is expected to rise 19% with a target of Rs. 1,050.

## What's next: all eyes on earnings
The next major catalyst for the sector is just around the corner. TCS has scheduled its Q1 FY27 results for July 9, while Infosys follows on July 23. The market will react to the earnings numbers and the revenue guidance for FY27. Both Q1 and Q2 FY27 are traditionally the stronger quarters for Indian IT, so any beat on guidance could trigger a sharp relief rally in these beaten-down names.

## What this means for you
- **For investors:** If your portfolio holds IT stocks like HCL Technologies, Wipro or Tata Technologies, the lowered targets point to a further 10% to nearly 29% downside, so weigh your moves carefully.
- **For jobs:** With AI eating into coding, testing and maintenance work and growth forecasts cut, hiring and salary growth in the IT sector could come under pressure.

## Questions & Answers

### 1. Which three IT companies did JPMorgan downgrade or cut targets on?
HCL Technologies, Wipro and Tata Technologies took the biggest hits, with sector targets trimmed by up to 27%.

### 2. Which stock faces the steepest downside?
Tata Technologies, with an implied downside of nearly 29% from its current price of Rs. 759.

### 3. What is HCL Technologies' new target?
Its target was lowered 27% to Rs. 1,000 from Rs. 1,370, implying another 10% downside from the current price.

### 4. Which stocks does JPMorgan still back?
It kept an 'Overweight' rating on TCS, Infosys, Mphasis and Cyient, with upside potential ranging from 16% to 19%.

### 5. How fast is Indian IT revenue growing right now?
Revenue growth has been stuck at just 2 to 3% for three years straight.

### 6. When are the next IT earnings due?
TCS reports its Q1 FY27 results on July 9 and Infosys follows on July 23.

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