Anand Rathi Warns of AI Infrastructure Financial Risks

Brokerage firm Anand Rathi warned that the global artificial intelligence infrastructure boom is creating significant financial risks for technology companies due to intensive capital expenditure. While demand for cloud services from providers such as AWS, Azure, and Google Cloud remains strong, the firm notes these investments have not yet translated into consistent cash generation.

Microsoft was the only major hyperscaler to report positive free cash flow in the third quarter of 2026. This financial pressure contributed to a 5.52 per cent plunge in the Nasdaq Composite on Thursday, as investors grew concerned over sustainable returns and potential regulatory scrutiny following United States midterm elections.

Anand Rathi suggests this environment may trigger a capital rotation toward asset-light businesses with strong free cash flow. The firm indicates this shift could benefit Indian IT services companies, which are currently trading below their 15-year average price-to-earnings multiples.