AI Stock Meltdown: E2E Networks and Netweb Plunge as Global Tech Selloff Intensifies Amid Valuation Fears
Artificial intelligence-linked companies faced significant headwinds on Thursday, caught in a deepening global technology selloff. The sector saw widespread selling pressure amid growing scrutiny over elevated technology valuations and concerns regarding the future growth trajectory of AI services.Major AI Stock Losses Are Reported
The sentiment across the Indian market mirrored this downturn, with all major AI-focused stocks trading in the red. E2E Networks emerged as the biggest laggard, plunging 4.99 percent to reach Rs 369. Orient Technologies declined 2.03 percent, closing at Rs 244.10. Netweb Technologies saw a 2.29 percent decline, trading at Rs 4,197.10.Other AI stocks also experienced dips. Black Box slipped by 1.67 percent to Rs 995.80. Anant Raj was marginally affected, closing lower by 0.14 percent at Rs 518.60. The collective weakness highlights the pressure building across the specialized tech segment.
Global Market Headwinds Fuel Technology Selloff
The domestic performance tracked a broader risk-off mood prevalent in global financial markets. A Bloomberg report highlighted that volatility is rising across equities globally. Investors are grappling with stretched technology valuations, the concentration of market power among a few megacap companies, and the wave of large IPOs currently underway.Furthermore, bond markets are signaling tighter financial conditions worldwide. Traders are factoring in higher borrowing costs as the European Central Bank is expected to deliver its first interest rate hike since September 2023 later on Thursday.
Expert View: AI Advancements Intensify Revenue Concerns
Concerns regarding rapid technological advancement within AI are adding distinct pressure to the sector, according to analysts. Sumit Pokharna of Kotak Securities noted that the Nifty IT Index is down around 2 percent for the day. Over the past six months, however, the index has fallen approximately 27 percent.The worry extends beyond market sentiment into technological capability itself. Anthropic's recently launched Claude Fable 5 and Mythos 5 models have intensified fears of revenue deflation for Indian IT services companies. This is especially true for firms that heavily rely on application development and maintenance (ADM) services.
Pokharna stated that these new AI models possess significantly stronger software engineering capabilities. The models are capable of generating code quality that approaches human levels, with the potential to surpass it within the next year.
Investor Sentiment Remains Cautious Across Markets
Chris Beauchamp, chief market analyst at IG in London, commented that investors remain particularly skittish. He suggested that the current situation is best described as "once bitten, twice shy." This apprehension suggests a continued drift lower for the sector at present, although he maintained that this does not alter the overall trend trajectory.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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