Indian benchmark indices opened with a gain on Friday amid a positive trend in global markets. Despite the positive start, the IT sector is witnessing extreme pressure. This is mainly because of the announcement of Anthropic’s new AI model, Mythos, which increased pressure on tech company stocks. Its impact was so significant that the Nifty IT index fell by almost 3 per cent, and the shares of many big companies also fell. Almost all the companies in the Nifty IT index were seen trading in the red. Big names like Infosys, TCS and Mphasis are among the losers, with Coforge facing the biggest drop. However, Wipro saw some gains as the company announced that it would consider a share buyback on April 16.
What is the Mythos model?
Anthropic’s new AI model, Mythos, is specifically designed for cybersecurity and coding. It claims to be faster and more accurate than humans and previous systems at identifying and correcting errors. It is currently being tested with a limited set of partners, including Amazon, Google, Microsoft, and Nvidia, as part of Project Glasswing.
Why was the IT sector affected?
Experts believe that such advanced AI models could threaten the business models of IT service companies. Companies can now handle coding, security, and other technical tasks with AI, potentially reducing the demand for outsourcing. This has led to fear among investors, who have begun selling IT stocks.
TCS data raised concerns
TCS’s recent results further fueled concerns about the IT sector. The company reported a decline in dollar revenue for the first time since its listing. While the fourth quarter showed a slight improvement, overall performance remained weak, shaking investor confidence.
IT sector is already under pressure
Earlier in February, the Nifty IT index fell by nearly 20 per cent due to AI-related news. At the time, investors feared that AI startups could disrupt traditional IT companies’ business.
Market experts believe that the rapidly expanding scope of AI presents both challenges and opportunities for the IT sector. Companies that adopt AI quickly will thrive, while those relying on older technologies may suffer losses.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)
