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It was an ‘A-ha’ moment for veterans on Dalal Street with strong reminders from the dot com era of 1999 and early 2000, when they read online that the Oracle stock price in US trading jumped nearly 35% during Wednesday trade.
And just like the dot com era when stocks related to internet networking and allied areas like Cisco jumped nearly 20 fold during 1996 to its peak in early March 2000, and traded at a P/E of over 100 times and defied all investment logic, one is witnessing a similar trend emerging in global markets.
Artificial intelligence is not just redefining the IT and software industry, but also user industries with the potential to improve efficiencies by 10- 50 times over the next few years, as per various estimates.
In the case of Oracle, the recent jump in its stock price is related to global media reports on its AI business – Oracle Cloud Infrastructure expects revenue to grow 77% to $18 billion this fiscal year — and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years, Safra Catz, CEO said in a statement on Tuesday.
Global financial sites point out that Oracle Corporation closed at $ 292.2 at the end of Friday trading in the US, trades at a ‘traditional’ P/E of nearly 67.6 times.
One of the biggest players in the AI segment is Nvidia, and its well documented rise to a $ 4.32 trillion market cap stock, and it trades at a ‘traditional’ P/E of more than 50 times, according to global financial sites.
Even, the legendary global investor, Warren Buffett, as per media reports has nearly $ 66 billion invested in stocks related to AI in its Berkshire Hathaway portfolio in July 2025, and that has helped him considerably to outperform the benchmark S&P 500.
Indian IT stocks ‘stuck’ in time
In India there is no pure play AI-related stock like Nvidia. And most top tier IT players like Infosys, Wipro and HCL Tech along with mid-cap players like Persistent Systems and Mphasis are actively involved in AI-related projects for clients on a global basis.
HCL Tech in its annual report for FY25 has highlighted that it has 500 AI and gen AI engagements for 400+ clients.
And Infosys in its FY25 annual report has highlighted that it has been identified as a global leader in nine AI rankings by various industry analysts. Also, the Bangalore-based company has successfully delivered over 400 generative AI projects with Infosys Topaz, its generative and agentic AI-powered services and solutions.
Mid-cap IT services player, Mphasis had highlighted while declaring its June 2025 quarter results that its new TCV wins was $ 780 million in Q1 FY26 vis-à-vis $ 319 million a year earlier, and 68% AI-led wins.
Persistent Systems has highlighted in its June 2025 quarter results that it has filed for 55+ patents in core and emerging AI technologies, and it has pivoted to AI-led, platform-driven seamless strategy.
However, Indian IT services and allied stocks have not been able to capture investors’ attention, local and foreign, for their AI- related work, in contrast to the global icons in this field.
Indian IT stocks are still being valued on ‘traditional’ metrics which have been in vogue for nearly 25 years – growth on a quarter-on-quarter basis in constant currency terms, attrition levels, net profit growth on a q-on-q basis and company growth forecasts etc.
Indian IT stocks are also still valued on the ‘traditional’ metric – trading at a PE of estimated forward earnings for the next one or two years.
Is it time for a change?
Investors in Indian IT stocks on Dalal Street, in tune with global trends, should now start looking at the big picture of growth in global AI spending over the next 3-5 years, say 2030, and the resulting opportunities for local players.
Investors need to look beyond the traditional q-o-q growth metrics and forecasts, and instead view Indian IT players and their role in the global AI value chain over the next 3 to 5 years.
The IT industry is witnessing a massive change with the increased use of AI, and its high time investors in local IT stocks also change their mindset on how to value these stocks.
On a ‘traditional’ valuation, Infosys trades at a P/E of 21 times estimated consolidated FY 26 earnings, while HCL trades at a P/E of 24 times. Mphasis trades at a P/E of 30 times estimated consolidated FY 26 earnings.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article.
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