As U.S. tech giants like Alphabet's Google, Microsoft, and OpenAI pledge over $10 billion to build large-scale AI infrastructure in India, investors are scrambling to identify local companies poised to benefit from this unprecedented investment surge. The focus has shifted to Indian firms linked to data center construction, which stand to gain from the country's burgeoning AI ecosystem.
The development of AI-supporting infrastructure is expected to accelerate the growth of ancillary data center businesses, including core power equipment manufacturers and major power generation firms. By 2027, India's data center market is projected to attract over $100 billion in investments. A custom index tracking 10 such ancillary companies has surged more than 30% since April, with potential beneficiaries ranging from data center operators to electrical equipment makers and liquid cooling solution providers.
The creation of an AI ecosystem presents a major investment opportunity in India's $5.4 trillion stock market, which has lagged behind the global equity rally this year due to the absence of pure-play AI hardware stocks like Nvidia, Broadcom, Micron Technology, and AMD, as well as cloud computing giants such as Google, Microsoft, and Amazon. Instead, Indian investors are turning to local data center enablers—from power equipment manufacturers to energy producers—that are expected to reap significant benefits from AI-related infrastructure spending, making this one of the hottest equity trades globally.
CBRE Group Inc. forecasts India's data center market will exceed $100 billion by 2027. "India is powering its AI era through core infrastructure—server clusters and energy capacity to drive data centers," said Shambhavi Gupta, founder of global macro insights platform Nine Spot Seven. "Unlike the U.S. tech rally, India's AI investment boom is rooted in tangible assets."
A custom index tracking 10 such ancillary stocks has climbed over 30% since April, nearly doubling the gains of India's benchmark NSE Nifty 50 Index during the same period. U.S. tech giants are fueling this momentum. Google recently outlined plans to invest $15 billion in AI infrastructure hubs in southern India, partnering with local firms. OpenAI is reportedly exploring a major AI data center in India, while Microsoft earlier announced a $3 billion commitment to expand its cloud and AI infrastructure in the country. Amazon plans to invest $12.7 billion by 2030 to build one of India's largest AI data centers.
Key beneficiaries of this data center boom include: - **AdaniConneX Pvt.** (a joint venture between Adani Enterprises Ltd. (+2.1%) and Bharti Airtel Ltd. (+7.3%)): Collaborating with Google on a major AI project in Visakhapatnam. - **Reliance Industries Ltd.** (+6.9%): Expected to invest up to $15 billion in a 1-gigawatt AI data center. - **Tata Consultancy Services Ltd.** (+0.7%): Planning a 1-gigawatt AI data center, with OpenAI seeking local partners for its Indian operations. - **Sify Infinit Spaces Ltd.**: Filed for a $417 million IPO, while AI unicorn Fractal Analytics also submitted IPO plans in August.
Electrical and power equipment manufacturers, such as Hitachi Energy India Ltd. (-12%), Siemens Ltd. (+2.1%), Schneider Electric Infrastructure Ltd. (-17%), and ABB India Ltd. (-5.3%), are poised to capture a significant share of data center capital expenditures. "Data center investments will be a major stimulus for India's power sector," said Ashish Gupta, CIO of Axis Mutual Fund, noting that power-related costs could account for 40% of data center spending.
Liquid cooling solutions are another critical area, given the high energy demands of AI workloads. Blue Star Ltd. (+11%) and Voltas Ltd. (+4.2%) lead in providing advanced cooling systems for data centers.
On the hardware front, Netweb Technologies India Ltd. (+99%) is a key player in servers, storage, and AI supercomputing, while E2E Networks Ltd. (+49%) specializes in cloud-based AI infrastructure and high-performance computing.