Asian stocks retreated from record highs on Friday as a fresh wave of concern about artificial intelligence’s disruptive potential swept global markets, inflicting heavy losses on technology shares from Tokyo to Mumbai.
The sell-off began on Wall Street on Thursday, when the S&P 500 fell 1.6% and the Nasdaq Composite dropped 2% as investors exited software and tech stocks seen as vulnerable to AI-driven automation. The trend spread to Asia on Friday: Japan’s Nikkei 225 fell 1.2%, Hong Kong’s Hang Seng lost 1.7% and the Shanghai Composite declined 1.3%.
Heavy pressure on India’s IT sector
Indian tech stocks were among the hardest hit, with the Nifty IT index tumbling nearly 5% in early trading on Friday. Major outsourcing firms bore the brunt of the selling: Infosys fell 6.2%, Tata Consultancy Services (TCS) dropped 4.8% to a 52-week low, and Wipro lost 3.7%.
On Thursday alone, the market value of large IT companies fell by about ₹1.3 lakh crore. Vinod Nair, head of research at Geojit Investments, said: “AI is driving a structural shift in Indian IT services by compressing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model.”
Concerns over Anthropic’s tools
The sell-off stems from growing concern about enterprise AI tools developed by Anthropic. The company’s Claude Cowork product can automate tasks in sales, finance and legal functions. These tools have renewed fears of disruption to traditional software-as-a-service (SaaS) business models. Apple shares fell 5% on Thursday — the company’s worst performance since April — wiping about USD 200 billion off its market value.
AppLovin fell 18.7% despite beating earnings expectations, and Cisco Systems dropped 11.1%. Ed Yardeni, president of Yardeni Research, said: “Investors are very anxious about the implications of AI, both positive and negative. Right now they’re focused on the disruptive aspects.”
A year for AI to prove itself
Analysts describe 2026 as AI’s “prove-it year”, when companies are under pressure to show real returns on their enormous investments.
Big tech companies have projected combined capital expenditure of USD 650 billion on AI-related infrastructure this year. The Nifty IT index is down more than 11.5% year to date, and TCS’s market value has fallen below ₹10 lakh crore for the first time since December 2020. Markets are now focused on Friday’s release of US inflation data, which could further shape investor sentiment.
