Global enthusiasm for artificial intelligence (AI) stocks is showing signs of strain, with investors beginning to question if the sector is overheating. As capital potentially rotates away from over-owned markets, Indian companies linked to the AI theme have witnessed significant corrections. Three prominent stocks—Cyient Ltd, Oracle Financial Services Software Ltd (OFSS), and Tata Elxsi Ltd—are currently trading at substantial discounts, down between 32.5% and 44.5% from their respective 52-week highs recorded in late 2024.
Significant Declines Amid Broader AI Concerns
While AI continues to be a dominant global growth driver, influencing GDP more than consumer spending in some analyses, fears of a bubble are mounting. This has led to a cautious stance, with global investors eyeing markets like India. For bargain hunters, this correction presents a potential opportunity, though experts urge caution, emphasizing that these are not pure-play AI companies and their recent performance has been mixed.
Cyient Ltd: Engineering Firm Bets Big on AI Silicon
Cyient Ltd, a global engineering and technology solutions provider, has aggressively integrated AI and Generative AI across its operations. A key strategic move was its acquisition of a 27.3% stake in Azimuth AI in 2024, a fabless custom ASIC company. This partnership bore fruit in November 2025 with the launch of ARKA GKT 1, hailed as India's first-generation intelligent power silicon chip for ultra-low power edge AI applications.
Despite this innovation, the stock has faced severe pressure. As of December 12, 2025, it traded at ₹1,167.3, a steep 44.5% fall from its 52-week high of ₹2,106 (December 16, 2024). The decline has been fueled by consistent selling by foreign institutional investors (FIIs) and weak quarterly results. For the reported quarter, Cyient's revenue declined 3.7% year-on-year to ₹1,780 crore, while net profit plunged 23.42%.
Oracle Financial Services Software: Banking Tech Giant Faces Promoter Selling
Oracle Financial Services Software (OFSS) offers AI and machine learning-enabled solutions to the financial services industry, built on a modern microservices architecture. However, its stock has not been immune to the sell-off, dropping 39.5% to ₹7,987 from its peak of ₹13,203.6 (December 30, 2024).
A major factor behind this drop is ongoing promoter selling. Financially, the September 2025 quarter presented a mixed picture: revenue grew 6.9% to ₹1,780 crore, but net profit fell 5.5% to ₹550 crore. The company continues to focus on expanding its global footprint through enhanced sales and marketing efforts.
Tata Elxsi: Design Leader Sees Profit Squeeze
A veteran in the design and technology space, Tata Elxsi has over a decade of AI experience, supported by platforms like TEDAX and IRIS. It bolstered its capabilities in July 2025 by partnering with San Francisco's KAVIA AI to integrate AI-powered automation in software development.
Nevertheless, the stock has corrected by 32.5%, falling to ₹5,029.7 from its high of ₹7,448.8 (December 12, 2024). Stake reductions by both promoters and FIIs in the September 2025 quarter contributed to the decline. The company's operational performance weakened, with revenue dropping to ₹920 crore from ₹960 crore a year earlier, and net profit witnessing a sharp 32.5% year-on-year decline to ₹150 crore.
Investment Outlook: Caution Amid the Long-Term Promise
India's AI ecosystem is poised for explosive growth, with the IT sector projected to expand from $264 billion to over $400 billion by 2030, driven significantly by AI adoption. Stocks trading at a deep discount to recent highs may seem attractive for investors betting on this long-term digital transformation.
However, the recent financial results of these companies highlight the inherent volatility and risks. Investors are strongly advised to look beyond the "AI" label and conduct thorough due diligence. Key factors to consider include:
- Company fundamentals and sustainable revenue growth.
- Quality of corporate governance.
- Reasonable stock valuations even after the fall.
- The specific roadmap and monetisation potential of their AI initiatives.
While the AI revolution is undeniable, stock selection in this space requires a careful assessment of business strength and a tolerance for potential short-term turbulence.
