The India IT sector faces an uncertain demand environment from an unprecedented confluence of GenAI-led deflation and geopolitics, according to a JPMorgan research report. The brokerage warned that a meaningful recovery remains distant, noting the IT services industry "has been stuck at 2-3% revenue growth over the last three years" and, with "AI deflation still only in Year 2," it sees "further headwinds to growth over the next two years." JPMorgan now does "not expect large-caps to hit mid-single-digit growth and hover around 3-4% revenue growth." The report cited "delays in deal ramp-ups and signings due to continued client indecision from geopolitical uncertainty and sharp AI changes," with weakness likely to "bleed into 2QFY27." The firm stated the sector is in the first phase of its three-stage AI adoption model—Deflation—and now fears the recovery "will extend beyond FY29 to FY30." JPMorgan cut 1Q revenue growth assumptions "across the board" and models growth to "stay below 3-4% for the foreseeable future." Reverse DCF sanity checks drove "P/E multiple cuts by 10-25% across the board."