Reports of my death are greatly exaggerated! Why Nuvama is screaming buy on all top 10 IT stocks

Indian IT’s obituary is being rewritten yet again, but this time Nuvama is invoking Mark Twain’s immortal line — ‘reports of my death are greatly exaggerated’ — to argue that the sector is setting up for a powerful comeback, not a collapse. The brokerage upgraded all top 10 IT services stocks to ‘Buy’ after a brutal Gen-AI-driven selloff.

Nuvama says the Indian IT industry is once again at ‘that crossroads,’ where a new technology, this time Gen-AI, is projected as an existential threat to the offshore services model, much like Y2K, remote infrastructure management and the 2015–18 digital wave before it.

“We see no existential threat from Gen-AI,” the brokerage writes, arguing that enterprises will still need a “system integrator” to customise plug-and-play AI and software tools for their highly complex, brownfield technology stacks and to take ownership when “the system fails at 2 am.”

In its view, product companies “can (and do) go out of business; services companies seldom do,” because clients ultimately pay for a partner that understands their unique architecture and business processes, not just for faster code.

The trigger for the call is what Nuvama terms a “battle of narratives” that has hammered IT stocks as Gen-AI platform players such as Anthropic and Palantir roll out aggressive claims about automating everything from SAP migrations to COBOL modernisation. At the same time, SaaS leaders like Salesforce, Workday and Adobe have seen 40-50 per cent market-cap erosion over the past 12 months amid fears their models could be substituted.

The Nifty IT index has slumped about 20% year-to-date, with midcaps down roughly 25%, and individual names such as Coforge and Hexaware falling 30-40%, even though Q3FY26 delivery was “reasonable” and deal wins signal an improving demand outlook.
The brokerage notes that each negative AI headline, from Anthropic’s new productivity tools to Palantir’s SAP AI migration stack and Citrini’s dire scenario for Indian outsourcers, has been followed by sharp incremental corrections in the IT index.Nuvama contends the market has overcorrected this time compared with the last disruption cycle, when digital technologies slowed sector growth in FY16-18 but only produced a 10% drawdown in Nifty IT and modest declines in TCS and Infosys relative to the benchmark. Today, it says, a combination of more disruptive technology and a market “abundance of hedge/HFT funds” has amplified volatility, pushing valuations to “highly attractive” levels that are close to 15-year trough multiples for largecaps and near-bottom 1x PEGs for midcaps.

Its reverse-DCF analysis suggests current prices are discounting an implausibly anaemic 1–3 per cent terminal growth for most majors, with Coforge’s stock implying “zero terminal growth,” which the brokerage calls an “extremely low” assumption for a sector sitting on a fresh AI-led demand wave.

Against that backdrop, the brokerage slapped a “Buy” rating on all top 10 IT services names — TCS, Infosys, HCL Tech, Wipro, Tech Mahindra, LTIMindtree, Coforge, Persistent, Mphasis and Hexaware — while trimming target multiples only marginally to factor in Gen-AI risk. Even so, it still sees 14-84% upside over the next 12-15 months.

It reiterates a preference for Coforge, LTIMindtree, Persistent, Mphasis, Infosys and TCS, calling Coforge its top pick, and argues that investors “would make handsome returns in any/all of these stocks from current levels” as the cycle turns from near-term AI-driven revenue deflation to a much larger AI-services opportunity estimated at USD 300–400 billion by 2030.

Over the medium to long term, Infosys’ own AI-day estimates, which peg incremental AI services TAM at $300-400 billion by 2030 versus today’s $250-billion Indian IT industry, underpin the brokerage’s view that Gen-AI will ultimately be a “mammoth opportunity” rather than a death knell.

With valuations now baking in what it views as “extremely low” terminal growth and a fresh AI-services S-curve just beginning, the brokerage believes the sector is being priced as if it is dying precisely when its next big growth engine is taking shape, prompting its emphatic sector call: “We now have a ‘Buy’ on all the top-ten IT services companies.”