📉 A wave of “AI scare trade” volatility is moving through parts of the stock market as investors rethink which companies can protect earnings and pricing power if AI automates more white-collar work and squeezes software and services margins 34.
In India, the pressure has been most visible in listed IT services shares. Bloomberg described about a $56 billion hit tied to the AI-scare narrative 8. Even so, some investors see the drop as a selective buying opportunity, betting that the strongest IT services firms can adapt by shifting to higher-value work and using AI to lift productivity—keeping buyers active even as sentiment stays fragile 81.
One near-term bright spot for risk-weary investors is earnings season. Bloomberg noted that growth in India is starting to spread beyond a narrow set of sectors 1. Across markets, the common thread is a move away from broad “AI everywhere” excitement toward more selective stock picking 3.
Sources
- India Earnings Season May Offer AI-Scarred Bulls a Lifeline [bloomberg.com] (2026-02-17)
- Bloomberg Daybreak Asia: AI Scare Trade (Podcast) [bloomberg.com] (2026-02-16)
- What’s with Wall Street’s weird selloffs? [ft.com] (2026-02-16)
- Analysis-Luxury stocks’ volatility highlights AI jitters, hedge fund positioning [investing.com] (2026-02-17)
- The AI Market Crash Is Just Getting Started [seekingalpha.com] (2026-02-16)
- Fund Beating 99% of Peers Sees Few Software Firms Surviving AI - Bloomberg.com [google.com] (2026-02-16)
- Trillion-dollar AI market wipeout happened because investors banked that 'almost every tech company would come out a winner' - Fortune [google.com] (2026-02-16)
- AI Scare’s $56 Billion Hit Tests Resilience of India’s IT Stocks [bloomberg.com] (2026-02-16)
Highlights
- Luxury volatility: Luxury shares have seen bigger day-to-day swings, as hedge fund positioning and AI-linked risk cutting amplified moves, according to an Investing.com analysis 4.
- Podcast focus: Bloomberg’s Daybreak Asia devoted an episode to the “AI scare trade,” a sign of how central the theme has become to daily macro and equities positioning 2.
Perspectives
Bloomberg (India markets coverage): Bloomberg said the “AI scare trade” is testing conviction in India’s IT services names. Some investors are using the pullback to separate the firms that can adapt their delivery models—and still defend client spending—as AI changes how work gets done.
Financial Times (markets commentary): The Financial Times said AI-threat fears have wiped out billions in a range of stocks tied to white-collar work, including wealth management and insurance—helping explain some of the market’s unusual selloff patterns.
Seeking Alpha (investor opinion): Seeking Alpha framed the move as the start of a longer AI-driven correction, arguing investors may be underestimating how uneven the split between AI winners and losers could be.