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AI to Cut IT Costs, Boost Spending: Axis CIO
19 Feb
Summary
- AI to reduce IT service costs but increase overall tech spending.
- Banking sector expected to see double-digit loan growth.
- Earnings growth projection raised to 13-14% for the coming year.
Ashish Gupta, CIO at Axis Asset Management, foresees artificial intelligence significantly reducing IT service costs while simultaneously escalating total technology spending. He noted that this dynamic creates concern for Indian IT stocks, as companies will need to invest more in technology and modernize legacy systems.
Gupta expects the banking sector to achieve double-digit loan growth, citing improving economic indicators like inflation near 4% and stronger demand signals. He adjusted credit growth figures, attributing some recent increases to market shifts rather than solely organic growth.
Confidence in earnings recovery has markedly improved, with market earnings seeing no downward revisions for the first time in seven quarters. Gupta raised his earnings growth projection for the coming year to 13-14%, a substantial increase from the earlier 6-7% estimate.
Despite positive domestic outlooks, Gupta cautioned that foreign institutional investor (FII) flows remain a risk. Global growth strength and potential dollar appreciation could continue to impact capital flows into emerging markets, necessitating careful stock selection.
