New Delhi, Dec. 19 -- The artificial intelligence boom has propelled US technology stocks to historic highs, while India's IT services sector is struggling to keep pace, slipping into one of its weakest relative phases since 2023.

On a rolling three-year basis, the Nifty IT index is now underperforming its US technology peers in the Nasdaq by over 40%. The US tech-heavy index has outperformed India's Nifty IT since mid-2023-when the AI frenzy began-according to an analysis by DSP Asset Managers.

Indian IT has seen periods of relative weakness against global peers before, but analysts say what sets the current cycle apart is that the gap is being driven less by currency movements or outsourcing demand, and more by who controls the AI val...