Nifty IT up 3.5% as Nvidia results soothe AI infra spending fears

Investors say Nvidia's growth confirms expansion phase of AI capital spending

Shares of India's top information technology (IT) firms rallied sharply on Friday, driving the Nifty IT index up 3.5 per cent to close at 31,281.70. The surge was fuelled by Nvidia’s latest quarterly results, which confirmed that global spending on artificial intelligence (AI) infrastructure remains robust. In contrast, the benchmark Nifty 50 index saw a modest gain of 0.35 per cent, closing at 24,175.65.

 

Nvidia reported a revenue of $96.2 billion for the second quarter of financial year 2026-27 (Q2FY27), driven by continued demand for computing infrastructure that powers AI workloads. Net profit doubled to $59.7 billion, while diluted earnings per share (EPS) rose 128 per cent to $2.46. The stock was up 9 per cent in a single day to trade at $227.98.

 

 

Nvidia's financial year runs from February 1 through January 31 of the following calendar year.

 

This has had a direct effect on the stock prices of Coforge (which was up 6 per cent to trade at ₹2,014), TCS (up 4.16 per cent at ₹2,342), and Infosys (up 3 per cent at ₹1,144). Investors say that Nvidia's numbers confirm hyperscalers and enterprises are still in an expansion phase of AI capital spending.

 

"Sentiment improved after Nvidia reported better-than-expected quarterly earnings and issued a robust sales outlook, easing concerns about fading AI boom and reinforcing confidence that enterprise spending on AI infrastructure remains durable," says Arun Kailasan, research analyst, Geojit Investments. 

 

The rally was further supported by bargain-buying following recent corrections, as investors reassessed valuations in the context of sustained demand for AI infrastructure and growing opportunity for Indian IT companies to support enterprise AI adoption and integration.

 

The positive move in stock prices comes after a period of significant underperformance versus global tech. US-listed IT services peers such as Accenture and Cognizant have gained around 45-50 per cent over the past two months, while Indian IT companies have risen only 10-15 per cent, highlighting the relative lag in their performance.

 

“We see some scope for a catch-up trade, particularly if global technology spending remains supportive and concerns around AI disruption to traditional IT services moderate,” says Kunal Bajaj, research analyst, Choice Institutional Equities.

 

Nifty IT had lagged the broader market for much of the past year on fears that generative AI would shrink demand for traditional services. While Nvidia’s results are a capex signal, which is good for Indian IT segment, the long-term effects of AI are still considered to be negative for the country’s IT sector.

 

A sustained re-rating of Indian IT stocks would ultimately require stronger evidence of a recovery in discretionary spending and organic growth, rather than being driven purely by global tech sentiment, Bajaj says.

 

Over the past year, the Nifty IT index fell 11.85 per cent and is the worst-performing index in the Nifty basket.