AI will expand opportunities for Indian IT; luxury housing demand remains strong: BofA Securities

Synthetic intelligence could also be creating issues round job displacement and pricing strain within the IT providers trade, however the larger image remains constructive, in response to Kunal Tayal, Director, Fairness Analysis at BofA Securities.

Chatting with ET Now, Tayal mentioned AI is more likely to create new income opportunities for Indian IT providers corporations over the subsequent few years, even because the trade navigates a transition interval marked by altering shopper expectations and evolving know-how adoption patterns.

Largest AI use circumstances

Based on Tayal, coding has emerged as one of many largest AI use circumstances since 2025, which has fuelled issues that automation might cut back demand for conventional software program growth providers. Nonetheless, current advances by corporations similar to OpenAI and Anthropic counsel that AI functions are quickly increasing past coding into broader enterprise processes.

“It’s actually on the enterprise course of facet the place IT providers corporations ought to discover a new complete addressable market,” Tayal mentioned. He added that partnerships between AI platform suppliers and main IT providers corporations point out that service suppliers will stay an integral a part of the AI ecosystem somewhat than being displaced by it.

One other main alternative might emerge from know-how modernisation. As AI reduces the price of implementing know-how tasks, enterprises could speed up digital transformation initiatives, creating extra demand for IT consulting and implementation providers.

Enterprise adoption of AI nonetheless in its early phases

Whereas enthusiasm round AI remains excessive, Tayal cautioned that enterprise adoption remains to be in its early phases. Many organisations are experimenting with AI, however large-scale deployment remains restricted because of issues round information high quality, return on funding and operational readiness.

“The know-how remains to be at a nascent stage,” he mentioned, noting that adoption is more likely to evolve step by step somewhat than by way of a sudden surge.On issues that AI partnerships could turn out to be commoditised as a result of a number of IT corporations are working with the identical know-how suppliers, Tayal argued that differentiation will come from how successfully corporations combine AI options and construct proprietary mental property on high of present platforms. Corporations that develop distinctive AI-driven merchandise and capabilities might ultimately get pleasure from larger profitability and stronger aggressive positioning.

BofA’s evaluation means that the general market alternative created by AI might ultimately outweigh the disruption it causes. Whereas some present work could also be automated, new classes of demand are anticipated to emerge, resulting in a bigger addressable market for the trade over time.

Gung-ho on residential actual property

Past know-how, Tayal remains constructive on India’s residential actual property sector regardless of issues about affordability, wealth results and rates of interest.

He believes fears of the housing cycle peaking are overstated. House possession ranges in India stay comparatively low, leaving important room for long-term progress. As well as, giant listed builders proceed to strengthen their stability sheets and expand market share, enabling them to outperform the broader trade even when total sector progress moderates.

Luxury housing, specifically, continues to face out. Tayal mentioned the choice shift in direction of premium and luxury properties that started 4 to 5 years in the past remains intact, with no clear indicators of reversal. Whereas affordability housing might ultimately get well, luxury demand is anticipated to stay stronger within the close to time period.

Development prices have risen by roughly 10%, creating potential margin strain for builders. Nonetheless, Tayal doesn’t count on builders to cross these prices on to homebuyers. As a substitute, builders could offset the affect by way of different measures, together with changes in land acquisition prices and mission economics.

For buyers, the message from BofA is twofold: AI remains a long-term progress alternative somewhat than an existential menace for Indian IT, whereas the residential actual property cycle, particularly within the luxury phase, nonetheless seems to have room to run