IT stocks fall on May 12 after OpenAI announces Deployment Company for enterprise AI adoption

Shares of Indian IT companies traded lower on Tuesday, May 12, after OpenAI announced the launch of the OpenAI Deployment Company, a new company designed to help organisations build and deploy AI systems for everyday work.

Large and midcap IT stocks saw losses of up to 4% in early trade. Coforge, Persistent Systems, Mphasis, Infosys and LTIMindtree were trading with losses of around 3% to 4%, while Tech Mahindra, Tata Consultancy Services, HCLTech and Wipro were down between 2% and 3%.

The latest pressure on IT stocks came after OpenAI said the Deployment Company will embed engineers specialised in frontier AI deployment, known as Forward Deployed Engineers, into organisations working on complex problems. OpenAI also said the company is a committed partnership with 19 leading global investment firms, consultancies and system integrators, and will launch with more than $4 billion of initial investment.

According to analysts, OpenAI’s new launch places forward deployed engineers directly inside client organisations to identify AI opportunities, redesign workflows and deploy production systems at scale. Analysts noted that this overlaps with services traditionally offered by IT services companies such as Infosys, Cognizant and Accenture.

The pressure was visible across major IT counters. Infosys shares were down 3.6% at Rs 1,135.2, hitting their lowest level since December 2020. Tata Consultancy Services shares declined 3.5% to Rs 2,310, their lowest level since August 2020. HCLTech shares were trading 2.3% lower at Rs 1,168, the lowest level seen by the stock since September 2023.

The OpenAI announcement added to existing concerns around demand visibility, artificial intelligence disruption and pricing pressure in the IT services sector. Investors appeared to be tracking whether enterprise AI deployment by companies such as OpenAI could directly compete with parts of traditional IT consulting, workflow redesign and implementation services.

Overall, Indian IT stocks came under pressure on May 12 as OpenAI’s enterprise AI deployment push raised fresh concerns over the future role of traditional IT service providers in large-scale AI transformation projects.

Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Fingo is not liable for any losses arising from the use of this information.