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(Bloomberg) — As Alphabet Inc.’s Google and other US tech behemoths pledge billions of dollars to build artificial intelligence infrastructure in India, investors are racing to identify local firms set to benefit from the wave of investments.
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The creation of an AI ecosystem offers a fresh opportunity to investors in India’s $5.4 trillion market, which has so far trailed this year’s global equities rally in part due to an absence of pure-play AI names like US chipmaker Nvidia Corp. and Chinese chip designer Cambricon Technologies Corp.
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Investors are turning to local ancillary companies, from equipment makers to power generators, that are expected to benefit from the build-out of supporting facilities needed for AI — one of the hottest equity trades globally. Investments in India’s data center market alone are projected to top $100 billion by 2027, according to CBRE Group Inc.
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“India is powering the AI era through the infrastructure needed to run it — the servers and energy capacity,” said Shambhavi Gupta, founder of global macro insights platform Nine Spot Seven. “Unlike the tech rally, this one is rooted in tangible assets.”
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A custom index tracking shares of 10 such ancillary companies has jumped more than 30% since this year’s low in April when President Donald Trump’s tariff shocks rocked global markets. That’s almost double the gains in the benchmark NSE Nifty 50 Index during the period.
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Global tech heavyweights are fueling the momentum. Google last month outlined plans to invest about $15 billion building an AI infrastructure hub in southern India in partnership with some local firms. ChatGPT-maker OpenAI is also seeking to build a massive data center in the nation, Bloomberg News reported in September.
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Earlier this year, Microsoft Corp. said it aims to spend $3 billion to expand its cloud-computing and AI capabilities in India. Amazon.com Inc. already has plans to invest $12.7 billion by 2030.
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Here are some of the potential beneficiaries of this boom and their stock performance over the past three months:
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Data Center Operators and Partners
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AdaniConneX Pvt. — a joint venture involving tycoon Gautam Adani’s flagship Adani Enterprises Ltd. (+2.1% over three months), and India No. 2 wireless carrier Bharti Airtel Ltd. (+7.3%), is partnering with Google on its project in the port city of Visakhapatnam. Billionaire Mukesh Ambani’s Reliance Industries Ltd. (+6.9%) is also expected to spend as much as $15 billion for a one-gigawatt data center. The three companies together may account for 35%-40% of India’s data center capacity by 2030, according to Jefferies Financial Group Inc.
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India’s biggest software exporter Tata Consultancy Services Ltd. (+0.7%) also plans to build an AI data center of up to one gigawatt, while OpenAI is scouting local partners for its establishment.
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