In an interview with ET Now reported by ETMarkets/Economic Times, market expert Sandip Agarwal said he turned positive on the IT sector about six weeks ago after a year of caution and sees a meaningful earnings recovery ahead. Agarwal described the AI investment cycle as moving beyond the initial hardware-heavy phase led by AMD and other hardware providers, and told the outlet that the next phase should increasingly benefit software platforms and IT services as enterprises deploy and manage AI solutions. He also advised investors to prioritise valuation discipline over chasing growth when selecting IT stocks, per the ETMarkets report.
What happened
According to reporting by ETMarkets/Economic Times, market expert Sandip Agarwal told ET Now he turned positive on the IT sector about six weeks ago after a roughly 14-month period of caution. Per the same report, Agarwal said the initial leg of the AI boom was dominated by heavy hardware spending on GPUs and infrastructure by hardware providers such as AMD, and that the investment cycle is now moving beyond that hardware-intensive phase. ETMarkets reports Agarwal expects the next beneficiaries to include software platforms and IT services as enterprises adopt and manage AI capabilities. The report also notes Agarwal advised investors to emphasise valuation discipline rather than simply chasing growth when selecting IT stocks.
Technical details
Editorial analysis - technical context: Hardware procurement, especially GPUs and supporting datacenter infrastructure, has been the primary cost driver for early AI model training and inference capacity. Industry deployments typically follow a multi-stage path where initial model and infrastructure investments are followed by integration, tooling, and managed-services spending. This pattern means capture of downstream recurring revenue often shifts toward software platforms, cloud service layers, and systems integrators during the deployment and operations phases.
Context and significance
Agarwal's comments echo a common market narrative that a hardware-led investment phase can precede a services-led revenue cycle for the broader technology ecosystem. For public IT vendors, a moves from capex-heavy customer spending to software and services consumption often implies higher-margin, recurring revenue opportunities, which can support earnings recoveries after a muted growth period.
What to watch
For practitioners: observers should track three observable indicators to validate this transition in enterprise spending:
- •growth in licensing and subscription revenues at major IT services and software vendors
- •published customer case studies showing production AI deployments
- •accelerating deals for managed-AI and integration services
Market participants will also watch quarterly earnings commentary from large Indian IT firms for explicit revenue mix shifts from infrastructure-related services to software and managed services.
Direct quote
In the ET Now interview quoted by ETMarkets, Agarwal said, "If you recall, one month or 45 days back, I changed my stance from extremely negative for 14 months to very positive."
Scoring Rationale #
The piece is notable for market and practitioner audiences because it frames a potential earnings inflection for Indian IT firms tied to AI deployments, shifting emphasis from hardware to services. It is not a frontier-model or infrastructure milestone, but it matters for vendor revenues, hiring, and deal pipelines.
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