The landscape of the Indian Information Technology sector shifted dramatically on February 13, 2026, as Tata Consultancy Services (TCS) witnessed a historic sell-off. The stock price crashed to a five-and-a-half-year low, reaching levels not seen since September 2020. This massive correction has wiped out approximately 44 percent of the company’s value from its all-time peak of 4,592 recorded in August 2024.
The Catalyst of the Crash
The primary driver behind this sharp descent is a growing existential concern regarding Artificial Intelligence (AI) and its potential to disrupt the traditional linear growth model of IT services. The panic was triggered by global developments, specifically new AI tools capable of automating high-value corporate tasks such as legal compliance, contract reviews, and standardized responses.
Investors are increasingly worried that the “hours-billed” model, which has been the bedrock of Indian IT for decades, is under threat. If AI can perform tasks in seconds that previously required hundreds of man-hours, the revenue visibility and pricing power of giants like TCS could face a structural decline.
Q3 FY26 Performance: Stability Amidst the Storm
Despite the share price carnage, the actual financial performance reported for the December 2025 quarter (Q3 FY26) showed a company attempting to maintain its footing:
- Revenue: Stood at 67,087 crore, a modest growth of 5 percent year-on-year.
- Net Profit: Reported at 10,657 crore, which reflected a decline of nearly 14 percent compared to the same period last year, primarily due to one-time legal provisions and higher operational costs.
- Operating Margins: Remained resilient at 25.2 percent, showcasing the management’s ability to control costs even during a revenue slowdown.
- AI Revenue: In a significant strategic update, TCS revealed that its annualized AI services revenue has reached 1.8 billion dollars, growing at over 17 percent quarter-on-quarter.
Technical Outlook: Is the Bottom in Sight?
From a technical perspective, the stock is in a deep “oversold” zone. The Relative Strength Index (RSI) has dipped to extreme lows of approximately 12.5, a level that historically precedes a short-term technical bounce. However, the stock continues to trade below all major moving averages, including the 50-day and 200-day marks, suggesting that the broader bearish trend remains firmly in control.
Market analysts are divided on the path forward. While some global brokerages view this as a “deep value” opportunity, citing attractive dividend yields and the essential role IT firms play in digital “plumbing,” others warn that the transition to an AI-first economy will be painful and could lead to further valuation de-rating in the short term.
Understanding the IT Sector Correction
The shift in market hierarchy was further emphasized this week when State Bank of India (SBI) overtook TCS in terms of market capitalization, pushing the IT major down to the position of India’s fifth-largest listed company. For long-term investors, the question is no longer about when the stock will return to its peak, but rather how effectively TCS can pivot its 600,000-strong workforce to master generative AI before the legacy business erodes further.
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