25 stocks that survived AI crash reveal what themes could work within Indian IT space

The Indian IT sector is facing significant challenges, having experienced a sharp decline since late January due to concerns over the impact of generative AI on traditional outsourcing models. The Nifty IT index has dropped approximately 21% in February, marking its worst monthly performance in over 20 years, with a market cap erosion exceeding ₹6 lakh crore. The sell-off is largely attributed to fears that automation could reduce billable work and compress project timelines. Notably, stocks associated with legacy services have suffered the most, while a select group of smaller firms has thrived, driven by expectations of increased AI-related spending. In the face of this downturn, 25 stocks within the IT and tech services sector reported positive returns, defying the broader market trend. Leading the gains were companies like Blue Cloud Softech Solutions and Kellton Tech Solutions, among others. Analysts suggest that investors should differentiate between IT companies, as those integrating advanced hardware and AI capabilities are expected to outperform traditional service providers. The shift in focus from digital transformation to compute and intelligence is reshaping the competitive landscape, with firms that leverage high-performance technology likely to gain a significant edge over their peers.