Global investors’ preference for AI hits India IT stocks’ heft as tech bets

Shares of India’s vaunted IT outsourcing firms are facing a reality check, as global investors’ rush into the artificial intelligence theme starts to leave pricey old-economy tech stocks behind.

Unlike counterparts in the developed world and China, Indian software makers including leader Tata Consultancy Services Ltd. have yet to make significant advances in generative AI. That combined with a still cloudy outlook for client spending may soon leave them looking like the tech bets of yesterday.