MUMBAI, Oct. 2 -- The rapid evolution and adoption of artificial intelligence (AI) are reshaping the narrative, valuations and share-price performance of India's IT sector. Against the backdrop of cautious client spending and weak discretionary budgets, most IT companies are likely to see revenue growth slow in fiscal year 2027 (FY27) from FY26, according to Kumar Rakesh, India analyst - IT and auto at BNP Paribas.

While macroeconomic headwinds and concerns over generative AI disrupting traditional business models persist, some mid-cap firms are better positioned than their larger peers, which remain more exposed to AI-driven deflation. As a result, investors are moving beyond a simplistic "AI winners versus losers" framework towards a m...