Cognizant CEO reacts after Anthropic Claude Cowork crashes SaaS stocks, says AI is not magic

When global markets turned jittery after Anthropic’s latest AI announcements, Indian IT stocks felt the shock almost immediately. In a single session, fears around faster automation and shrinking demand for traditional IT services erased close to Rs 2 lakh crore in market value. Investors worried that tools like Anthropic’s Claude Cowork could suddenly make large parts of IT services redundant.

Amid this anxiety, Cognizant stepped forward with a message that cut against the prevailing panic. Speaking at the company’s post-earnings press conference on February 4, CEO Ravi Kumar S argued that the narrative around AI instantly replacing enterprise work is deeply flawed.

"AI is not a plug-and-play switch"

Kumar directly addressed the belief that advanced AI tools can simply be deployed inside companies and start delivering results overnight. According to him, that assumption ignores how enterprises actually function.

“A tool or a technology would be plugged into an enterprise landscape, and magically, there will be output coming out of it. If that's the case, why hasn't that value drifted into enterprises over the last three years (since OpenAI launched ChatGPT),” he said.

Kumar’s point was simple but pointed. If AI were truly a magic switch, enterprises would already be seeing massive economic gains. Instead, most of the value, he argued, is still sitting with infrastructure providers rather than flowing into business outcomes.

Why enterprises move slower than the hype

The Cognizant CEO explained that AI adoption is far more complex than headlines suggest. Enterprises do not operate in clean, isolated environments. They run on legacy systems, tightly coupled workflows, regulatory constraints and human decision-making.

“It is very complex, you have to integrate workflows, business flows, with AI-led action-oriented technology with human labour,” Kumar said, adding that AI must also fit into physical operations and existing operating layers before it can deliver meaningful gains.

This complexity, he argued, makes the idea of sudden, large-scale displacement unrealistic, at least in the near term.

Markets panic, but Cognizant posts steady numbers

Kumar’s comments came at a time when markets were reacting sharply to Anthropic’s developments. Investors feared that faster automation could compress demand for IT services, hitting revenue visibility for firms that rely on long-term enterprise contracts. Indian IT stocks bore the brunt of this reassessment.

Yet, Cognizant’s own numbers told a calmer story. The company beat its fourth-quarter revenue guidance, reporting $5.3 billion in revenue, up 4.9 percent year-on-year, or 3.8 percent in constant currency terms. Full-year revenue rose 7 percent to $21.1 billion, while operating margins expanded by 140 basis points to 16.1 percent.

These results, Cognizant suggested, indicate that its heavy investments in AI are beginning to translate into growth, even as clients remain cautious with spending.

AI adoption will be gradual, not disruptive overnight

Cognizant made it clear that it sees AI as an evolutionary force rather than an abrupt shock. Enterprise adoption involves redesigning processes, managing the coexistence of deterministic systems and probabilistic AI models, and embedding these tools into real-world operations.

“This drift of value will happen over the years. You need bridges to drift that value, and you need companies like Cognizant who will drift that value into enterprises,” Kumar said.

From the company’s perspective, this creates sustained demand for system integration, transformation and managed services, rather than eliminating the need for them.

Even AI leaders are pushing back on the fear narrative

Cognizant is not alone in challenging the market’s reaction. Former Infosys CEO Vishal Sikka recently described generative AI as creating a “jagged frontier,” where some areas see rapid gains while others remain resistant to automation.

Nvidia CEO Jensen Huang has also dismissed the idea that AI will make software obsolete. Calling the assumption illogical, Huang said software tools will be used by AI, not replaced by it. Drawing from Nvidia’s own experience, he noted that AI tools have freed up employee time rather than wiped out roles, allowing teams to focus on core strengths.

Interestingly, Cognizant itself partnered with Anthropic just months ago. The company plans to deploy Claude across up to 350,000 employees, using it to move from experimentation to production outcomes in coding, testing, documentation and DevOps workflows.