A Little-Known Indian Stock’s 530% Rally Shows Hidden AI Winners

Industrial chiller at Yotta Data Services Pvt. data center, in Navi Mumbai, India Photo by Dhiraj Singh /Photographer: Dhiraj Singh/Bloom

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(Bloomberg) — The overarching narrative is that Indian equity markets missed out on the global artificial intelligence boom. But a look under the hood reveals a slew of smaller firms winning from trillions of dollars being spent on AI capacity.

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The poster child for this rally is Sterlite Technologies Ltd., the optical-fiber maker owned by the Vedanta Group which has surged more than 530% this year. It got a $1.1 billion multi-year contract from a US-based hyperscaler last month. Its competitor, HFCL Ltd., has jumped 191% while MTAR Technologies Ltd., which makes precision cooling and power components, has more than trebled.

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An equal-weighted Bloomberg index of 28 Indian companies that feed the data-center ecosystem — from makers of transformers, switchgear, wires to cables and cooling systems — has added about $47 billion in combined market value this year, a rise of nearly 50%. The benchmark NSE Nifty 500, meanwhile, has lost over $300 billion in 2026.

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Since every AI query runs through power-hungry data centers which require immense electricity and cooling, old-economy industrial firms have transformed into India’s hottest market play. In Mumbai dealing rooms, it’s called the ‘AI capex trade.’

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“We may be on the wrong end of the AI trade, but we could be on the right side of the AI capex trade,” said R. Sivakumar, chief investment officer at Axis Mutual Fund. “One could consider companies benefiting from data centers and the entire value chain associated with this capex.”

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Amazon.com Inc. plans to invest $12.7 billion in cloud infrastructure in India through 2030, while Alphabet Inc. is spending about $15 billion on an AI infrastructure hub in Visakhapatnam.

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A Reliance Industries Ltd. joint venture signed an $11 billion pact to build local data centers last year, while AdaniConnex Pvt. has partnerships with Google as well as Uber Technologies Inc. to help build their data centers. 

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‘Picks and Shovels’

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“The most attractive exposure is in the industrial supply chain — the ‘picks and shovels’ that build, power, and cool these facilities,” Nomura Holdings Inc. analysts led by Akash Gupta wrote in a June 2 report.

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Also, a two-to-four year lead time in supplying some components has “created an enviable seller’s market with multi-year backlogs,” Nomura analysts wrote, adding that orders secured now will bring revenue between 2027 and 2029.

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Foreign investors are already piling in. Shareholding of foreign funds in industrials rose to 14% as of end-March, the highest in two years, according to Elara Capital (India) Pvt., even as global funds remain record sellers of Indian stocks.

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On a top-down basis, India is one of the worst-performing markets globally as it lacks pure-play AI firms and semiconductor makers that are turbocharging Taiwanese and South Korean equities. But the global obsession with generative AI is boosting those that keep these hyperscalers running, such as Hitachi Energy India Ltd., ABB India Ltd. and Cummins India Ltd.

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The runaway rallies of these below-the-radar beneficiaries are largely invisible in headline numbers, as many of them — Sterlite and MTAR for instance — remain excluded from the broadest domestic indexes.