Infosys and Wipro American Depositary Receipts (ADRs) edged higher in pre-market trading on Monday as renewed concerns over the sustainability of the artificial intelligence (AI) boom prompted investors to reassess traditional IT services companies. Infosys ADRs rose 1.01% to $12.02 and were up 0.75% at $12.03 in pre-market trading as of 7:46 a.m. Wipro ADRs gained 0.53% to $1.90 after rising 3.68% to $1.95 earlier.
The move comes as Indian IT stocks traded higher on Monday amid reports that Nvidia may raise prices for servers containing its AI chips. The development has raised fresh concerns over the escalating costs of AI infrastructure and whether the massive spending cycle could eventually weigh on the broader AI trade.
Nvidia Price Hike Sparks AI Bubble Concerns
According to a Bloomberg News report, some of Nvidia's largest customers have been informed that prices of servers containing its AI chips could rise by more than 15% in many cases, amid soaring memory chip costs.
The reported price increases are expected to take effect for systems shipped in early 2027 and could affect systems powered by Nvidia's flagship Vera Rubin and Grace Blackwell chips. The extent of the increase will depend on the chip generation and memory configuration, the report said, citing people familiar with the matter.
The potential increase has added another layer of uncertainty around the economics of the AI investment boom. Hyperscalers and technology companies have been aggressively increasing capital expenditure to build AI infrastructure, with Nvidia's chips and advanced memory forming a crucial part of these systems.
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Higher server costs could further increase the amount companies need to spend to maintain or expand AI infrastructure, raising questions about the returns they can generate from these investments.
Why Indian IT Stocks Are Benefiting
Interestingly, concerns around the AI trade have recently provided support to traditional Indian IT services companies. Indian IT stocks have experienced sharp swings this year as investors assess the potential impact of AI on the traditional outsourcing and technology-services model. Earlier, breakthroughs by AI startups triggered concerns that automation and generative AI could disrupt the industry's established business model.
However, the narrative has shifted as global technology stocks have faced renewed selling pressure. Indian IT companies have demonstrated relative resilience and are increasingly being viewed as a potential "anti-AI" trade as investors reassess the valuations of AI-focused companies.
The Nifty IT index has gained around 7% over the past 30 days. On Monday, the index rose more than 1% to an intraday high of 30,893, with Infosys and HCL Technologies gaining more than 1% each.
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The recovery has come even as global technology stocks faced renewed pressure. South Korea's tech-heavy KOSPI index fell around 3%, weighed down by weakness in semiconductor and AI-linked stocks.
Despite the recent rebound, Indian IT stocks remain among the biggest laggards this year. As of Monday, Wipro was down around 31% year-to-date, while Infosys had fallen nearly 30%. TCS was down about 28%, LTIMindtree around 25% and HCLTech nearly 19%.
The sharp declines have left valuations of several traditional IT companies more attractive relative to their recent levels, while investors are also reassessing the potential impact of AI on their earnings and long-term growth prospects.
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