Lack of AI is reducing India software stocks’ heft

Shares of 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 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.