JPMorgan Sees Up To 27% Downside In These 3 Tech Stocks, Says AI And Weak Demand Could Hurt IT Stocks Further

Today, JPMorgan, in its report released on Wednesday, has officially downgraded three major IT names and slashed price targets across the entire sector by up to 27%.

In a fresh sector note, JPMorgan flagged two big problems hitting Indian IT right now.

The first is AI. Companies like ChatGPT and other generative AI tools are quietly eating into the kind of work coding, testing, maintenance that Indian IT firms have built their businesses on for decades.

JPMorgan calls this "GenAI-led deflation," and says we're only two years into it. There's more pain ahead.

The second is global uncertainty. Geopolitical tensions and tariff anxieties have made enterprise clients in the US and Europe cautious. They're still spending on tech, but more of that budget is going toward AI and cloud, not traditional IT services.

Because of this, the Indian IT revenue growth has been stuck at just 2-3% for three years straight.

JPMorgan revised its medium-term growth assumptions downwards, now expecting large-cap IT firms to grow around 3% down from 4% earlier and mid-cap companies at 5%, down from 6%. The brokerage has also made a 25% cut in target price-to-earnings multiples. JPMorgan does not expect large IT services companies to return to their long-term average growth rates of 7-8% in the medium term.

Three IT Stocks Get Downgraded

HCL Technologies took the sharpest cut, as the target was lowered 27% to Rs. 1,000 from Rs. 1,370. At the current price of around Rs. 1,109, that means JPMorgan sees another 10% downside from here.

Wipro was downgraded with a new target of Rs. 160, down from Rs. 200. The brokerage is forecasting near-zero revenue growth for FY27 which is a pretty bad outlook for one of India's biggest IT companies.

Tata Technologies saw a smaller target cut, just 4%, to Rs.540), but the implied downside is the sharpest of the three nearly 29% from where the stock trades today at Rs. 759.

Stocks With Upside Potential

JPMorgan kept its 'Overweight' rating on TCS with a target price of Rs. 2,400, suggesting a 17% upside, Infosys with a target price of Rs. 1,200, projecting a 17% upside, Mphasis received a target of Rs. 2,600 with a 16% upside potential, and Cyient is expected to rise 19% and is given a target of Rs. 1,050.

Q1 FY27 Results Ahead

The next major catalyst for the sector is just around the corner. TCS has scheduled its Q1 FY27 results for July 9, while Infosys follows on July 23. The market will react according to the earning numbers and the revenue guidance for FY27. Both Q1 and Q2 FY27, traditionally the stronger quarters for Indian IT Any beat on guidance could trigger a sharp relief rally in beaten-down names.

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