A big reversal of style! The global AI chip market is declining, and India's IT sector soars 16% this month

The Zhitong Finance App learned that the Indian software sector is expected to record the largest monthly excess revenue in history compared to the global chip sector. This indicates that investors are selling off artificial intelligence (AI) related stocks and switching to information technology stocks that have been hit hard before. The NSE Nifty IT Index, made up of 10 Indian software exporters, rose 16% this month, while the MSCI Global Semiconductor and Equipment Manufacturers Index fell 13% over the same period.

This differentiation shows that investors are tired of rising chip stocks driven by artificial intelligence, and at the same time, Indian IT service providers have rekindled interest in layout after a long period of downturn. This shift comes as Korea's KOSPI index fell more than 30% from its high in mid-June, which is seen as a weather vane for the global semiconductor and artificial intelligence sector. Jefferies raised the Indian IT sector's rating to “neutral” last week and indicated that the decline in the AI trading market is expected to bring a phased rebound to the sector.

Indian software makers outperform global semiconductor stocks

On Tuesday, the shares of Infosys and Tata Consulting Services led Asian software companies in stock performance, both rising by more than 3%. Similar companies in China and Australia have also seen gains.

Meanwhile, global chip stocks experienced “Black Tuesday” due to factors such as uncertain returns on AI capital expenditure, Nvidia's “circular financing” concerns, and rising competition for memory chips in China. Korea's Kospi Index plummeted 10.76%, the biggest one-day decline since 1998. SK Hynix plummeted 14% and Samsung Electronics plummeted 13.58%; the Nikkei 225 Index closed down 4% and Kioxia closed 18%.

It is worth noting that the crowded “buy chips and sell software” trading in US stocks also showed signs of collapse. The iShares Extended Technology Software Industry ETF rose slightly by 0.3% this month, while the Philadelphia Semiconductor Index plummeted 19% during the same period.

Recently, Wall Street has been increasingly vocal about multiple software stocks. Guggenheim raised the ratings of three software companies, CRM.US (CRM.US), ServiceNow (NOW.US), and Check Point (CHKP.US), and stated that while artificial intelligence may have a disruptive impact, previous predictions that the industry will be destroyed are “pure nonsense.” HSBC raised the rating of Adobe (ADBE.US) from “hold” to “buy” and said “the market has overestimated the negative impact of artificial intelligence design tools.”