Infosys shares shed ₹25,000 crore in market cap across two-day fall as AI trade rebounds

Shares of Infosys Ltd., the Bengaluru-based IT services provider, extended their losses for the second consecutive day on Wednesday, October 28.

The stock has fallen 5.3% over these two sessions and has also shed over ₹25,000 crore in market capitalisation.

Infosys is also the top loser in the Nifty IT index, which in turn is the top loser among sectoral indices in Wednesday's trading session. The index is down 3.6% with all 10 stocks trading with losses between 1% to 5%.

IT stocks have witnessed profit booking over the last few sessions after the return of the AI trade in the global markets. The fall was further accelerated after SK Hynix reported its quarterly results earlier in the day, which showed that the AI trade is very much active.

South Korea's chipmaker SK Hynix delivering a record quarterly revenue and operating profit as it beat estimates as the rising demand for artificial intelligence (AI) infrastructure drove up memory chip prices.

Its operating profit surged 632.1% to 83.33 trillion won or $62.8 billion in the September quarter from last year. This was more than LSEG SmartEstimate of 76.72 trillion won.

It reported a revenue of 104.62 trillion won or $78.86 billion in the quarter under review, up 327.9% from last year and exceeding analyst estimates of 98.34 trillion won. Its quarterly sales also crossed 100 trillion won for the first time ever.

The stock surged over 10%, pushing the benchmark KOSPI index higher as well.

A rise in investor enthusiasm for global hardware and semiconductor AI stocks has largely proven to be inversely proportional to the decline in Indian primarily software-driven IT services stocks.

Infosys on AI, Q2 Results and Guidance Cut

Infosys CEO Salil Parekh spoke to CNBC-TV18

after the company's second quarter results, on the growing contribution of AI to its revenue, a healthy large-deal pipeline and strong free cash flow. He added that Infosys remains a preferred AI partner for its top clients and the company is well-positioned to navigate the ongoing shift in the industry.

Infosys reported its second quarter results on Friday, October 23. It cut its guidance for the entire financial year and now expects constant currency revenue growth to be 1% - 2% compared to the previous projection of 1.5%-3%. However, it maintained its EBIT margin guidance of 20%-22%.

This is the second consecutive quarter of the company cutting its guidance as in the previous one too it had narrowed the upper end of the guidance range to 3% from 3.5%.

The company attributed the guidance cut in the to a soft quarter, softer volumes and pricing pressures because of competitive intensity in the market. The management said it is only taking up deals that meets the company's economic guidelines and parameters. It also said Infosys is likely to witness margin pressure in the second half of FY27 because of wage hikes, which would be offset via Project Maximus.

Infosys reported a relatively weak September quarter compared to its largecap peers as its CC revenue growth of 1.2% was lower than Street estimates of 1.4%. Its EBIT margins at 21% were also below the CNBC-TV18 poll of 21.3%. At least seven domestic brokerages downgraded the stock after its results.

Stock reaction

Shares of Infosys are looking to recover from the lows of the day, currently trading 3.8% lower at ₹1,118.2. The stock is still up 11.5% in the last one month.

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