AI slowdown a ‘Double-edged Sword’ for IT majors: Kotak warns deflation risks could rise

The tech sector is in focus. The fears of AI-led disruption have taken a new dimension. Anthropic proposed to slow the pace of AI capability development, highlighting that AI’s improving capabilities could outpace the development of safety measures needed to control increasingly capable AI systems. However, Kotak Institutional Equities said that even though developments are new, they follow same old patterns and create “a double-edged sword”.

“It can reduce the viability of new cases, offsetting the tailwind of lower deflation. It can also have an opposite effect, i.e., the increase in deflation if the capability slowdown is more pronounced for non-software-related tasks compared with software engineering,” Kotak noted.