Shares of Tata Consultancy Services (TCS), HCL Technologies and Infosys extended sharp gains as the AI frenzy continued to fizzle out, boosting sentiment for India’s IT stocks that are being seen as the so-called ‘anti-AI’ trade. Nifty IT index has soared more than 2,000 points over just two sessions to cross 30,000 on Wednesday, marking the first time in nearly a month.

This came as heavyweight HCL Tech shares soared nearly 11% in two days since its Q2 results, while TCS and Infosys rallied 6-10% during the same period. The IT story: ‘Anti-AI trade’The recent rally in IT stocks comes after a sharp sell-off this year, driven by multiple headwinds, with the AI frenzy being the most prominent.

As hyperscalers continued to increase spending on the nascent technology, doomsday prophets began to sound the alarm for Indian IT companies, believing that the new innovations could lead to displacement in the sector. " We call it the ‘SaaSpocalypse,’ an apocalypse for software-as-a-service stocks," Bloomberg quoted Jeffrey Favuzza from the equity trading desk at Jefferies as saying.

However, some analysts soon began to question the excessive optimism around AI, with some screaming bubble burst like crisis ahead amid the massive spending behind AI infrastructure. Michael Burry, popular for correctly predicting the 2008 housing crisis, has been ramping up his warnings over the excessive optimism over AI.

Recently, he said that the market is currently in a 'denial' mood, a phase that could last six to nine months as seen during the previous 2000 and 2008 crises.. The latest two-day rally in the IT stocks was boosted after Broadcom CEO Hock Tan said many AI investors are behaving like casino gamblers, betting on something they have very little understanding of.

“A lot of investors have no clue what they are investing in. They set very extreme expectations only to find out that it’s almost like they are in a casino,” Tan said during an event in Singapore.

The head of Broadcom, which designs some of the components integral to the global data center buildout, also criticized businesses which were wasting money on AI initiatives and questioned the longer-term economics of money-losing AI labs. Tan said that ChatGPT-maker OpenAI reaching annualized revenue of $50 billion in September points to a viable business model but offers little guarantee on the company’s long-term profitability..

This comes after HCL Tech’s Q2 earnings print impressed market, with the IT major reporting 21% year-on-year (YoY) growth in consolidated net profit to Rs 5,132 crore for the second quarter of FY27. Axis Securities however remains cautiously optimistic about the IT services sector.