As global investors continue to chase opportunities linked to the artificial intelligence boom, India finds itself on the sidelines of one of the biggest market themes driving capital flows worldwide. According to market veteran Punita Kumar Sinha from Pacific Paradigm Advisors, the country's lack of exposure to semiconductor manufacturing has limited its participation in the AI-driven rally that has captivated investors across the United States and North Asia.Speaking to ET Now, Sinha noted that while India's technology sector has already undergone a significant correction, much of the pessimism surrounding the industry may already be reflected in stock prices.IT Sector Has Discounted Many ConcernsDiscussing the outlook for Indian IT companies, Sinha said the sector has borne the brunt of investor concerns around artificial intelligence and its potential impact on software services."It has kind of already corrected and reflected most of the concerns. I mean software. But when you look at technology globally, it is actually doing very well because of the AI trade and unfortunately in India we do not have the semiconductor industry to really tap into this trend the way global investors are doing across North Asia, across the US. I mean, everybody is just trading on AI and AI-related companies and that is hurting the software and the software services, has already hurt the Indian IT services companies enough. The valuations are discounting a large amount of these concerns, but the confidence has not yet come back into the sector because there is a lot of confusion on what it means for the sector," she said.While uncertainty remains over the long-term impact of AI on IT services, she believes investors should not completely ignore the sector at current levels.Signs of Value EmergingAccording to Sinha, conversations with company managements suggest that the operational impact of AI has not been as severe as market fears imply."There is definitely now value emerging in the sector and if you speak to the companies themselves, they are not really seeing the negative impact as much as it has been made out to be. So, while yes, longer term nobody really knows how the AI industry is going to affect this industry. Some people are saying that actually the hiring is not going to get impacted as much and the business is not going to get impacted as much because there is a lot of legacy systems that these companies are still working on. So, I do not think anybody really knows how this is going to pan out but that is why the stocks have corrected. So yes, we are seeing some of these stocks bottoming out and one should definitely not be hugely underweight right now."Her remarks suggest that although uncertainty remains elevated, the sharp correction in IT stocks may have already accounted for many of the risks investors fear.Why Foreign Investors Are Looking ElsewhereSinha explained that India has struggled to attract global attention amid geopolitical tensions, higher oil prices, currency weakness and the overwhelming enthusiasm surrounding semiconductors and AI-related investments."So, well, India is still really not getting the attention for a number of reasons. One, the geopolitics even though India has been more of a collateral damage, the higher oil prices, the weakening rupee. The weakening rupee is really what is concerning foreign investors because a large part of their returns are getting eroded through the weakening of the rupee, so the dollar returns have not been great as a result and in the interim the liquidity is all going towards semiconductors and North Asia, Korea, Taiwan, China, US, that is where most of the investors have focused on."Despite these challenges, she highlighted that India's strong domestic investor base has helped cushion the market from larger disruptions.Earnings Growth Continues to Support the Case for IndiaWhile foreign inflows have shifted elsewhere, Sinha pointed out that analysts continue to forecast healthy earnings growth for Indian companies across multiple sectors."When I look at earnings growth by analysts, they are still projecting many companies to have double-digit earnings growth and the analyst estimates that are covering bottoms-up the companies in India are seeing still estimates being revised up. So, if they have got their analysis right, which they do a lot of deep research on these companies, then it would make it seem that the valuations are definitely more attractive. They are definitely more attractive than the last five to ten-year averages."She added that if projected earnings growth materialises, Indian equities could offer attractive opportunities relative to historical valuations.AI Boom May Eventually Face Capital ConstraintsAddressing concerns that global capital may continue favouring AI-linked markets over India, Sinha argued that no investment trend lasts forever.She warned that the massive spending required to sustain current growth projections in semiconductors, data centres and AI infrastructure could eventually encounter funding limitations."I think that the growth can only sustain as long as there is enough capital to spend because to keep on growing at the rate that these companies are projecting and are requiring, they do need capital and there is not enough capital to support all the capex that is required for all the capacity for data centres and the semi-equipment and the chips that will be required to keep up with the demand for AI."According to her, some companies that were previously flush with cash are already evaluating alternative funding options, including debt financing, highlighting that even high-growth themes face practical constraints.Domestic Themes Continue to Offer Growth OpportunitiesAlthough India is not currently a major beneficiary of the AI-driven investment cycle, Sinha believes several domestic sectors remain well-positioned for sustained expansion.She highlighted growing private-sector capital expenditure, particularly in engineering, manufacturing and infrastructure, alongside continued strength in healthcare, which remains relatively insulated from the technology cycle."While we do not have the semiconductor industry, we are seeing some improvement in capacity additions and so the private sector is beginning to do some capex and as a result engineering, infrastructure, manufacturing that sector is also seeing double-digit growth projections. We are seeing double-digit growth forecasted obviously in healthcare, which is totally not dependent on semiconductors or it basically is a secular theme that is relatively insulated from technology, software, semiconductors."Long-Term Story Remains IntactDespite near-term challenges from oil prices, inflation concerns and intense competition for global capital, Sinha remains constructive on India's long-term prospects.She believes investor attention could eventually return to India once enthusiasm surrounding AI and semiconductors moderates and macroeconomic concerns ease."India is definitely not a winner in this AI trade for now and has to work quite hard at keeping up with some of the innovation that is going on in the rest of the world."For now, however, global investors remain captivated by the AI revolution. India may not be leading that race, but strong domestic demand, improving valuations and resilient earnings growth could eventually bring the spotlight back to one of the world's fastest-growing major economies.