Trader’s guide to India’s data centre boom powered by Google, OpenAI
Investments in the country’s data centre market are projected to top US$100 billion by 2027
[MUMBAI] As Alphabet’s Google and other US tech behemoths pledge billions of dollars to build artificial intelligence (AI) infrastructure in India, investors are racing to identify local firms set to benefit from the wave of investments.
The creation of an AI ecosystem offers a fresh opportunity to investors in India’s US$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 and Chinese chip designer Cambricon Technologies.
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 centre market alone are projected to top US$100 billion by 2027, according to CBRE Group.
“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.”
A custom index tracking shares of 10 such ancillary companies has jumped more than 30 per cent since this year’s low in April when US 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.
Global tech heavyweights are fuelling the momentum. Google last month outlined plans to invest about US$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 centre in the nation, Bloomberg News reported in September.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Earlier this year, Microsoft said it aims to spend US$3 billion to expand its cloud-computing and AI capabilities in India. Amazon already has plans to invest US$12.7 billion by 2030.
Here are some of the potential beneficiaries of this boom and their stock performance over the past three months:
Data centre operators and partners
AdaniConneX – a joint venture involving tycoon Gautam Adani’s flagship Adani Enterprises (+2.1 per cent over three months), and India No 2 wireless carrier Bharti Airtel (+7.3 per cent), is partnering with Google on its project in the port city of Visakhapatnam. Billionaire Mukesh Ambani’s Reliance Industries (+6.9 per cent) is also expected to spend as much as US$15 billion for a one gigawatt (GW) data centre. The three companies together may account for 35 per cent to 40 per cent of India’s data centre capacity by 2030, according to Jefferies Financial Group.
India’s biggest software exporter Tata Consultancy Services (+0.7 per cent) also plans to build an AI data centre of up to one GW, while OpenAI is scouting local partners for its establishment.
Meanwhile, Sify Infinit Spaces, one of India’s data centre pioneers, last month filed for a 37 billion rupee (US$417 million) initial public offering (IPO). Fractal Analytics, India’s first AI unicorn that provides related products and services, also filed for an IPO in August.
Electrical and power equipment
A large portion of capital expenditure for data centres is expected to flow toward electrical and power equipments including makers of switchgears, transformers, and power distribution units.
Stocks to watch out for: Hitachi Energy India (-12 per cent), which provides end-to-end electrification equipment for data centers; Siemens (+2.1 per cent), Schneider Electric Infrastructure (-17 per cent) and ABB India (-5.3 per cent), which offer power distribution systems and industrial equipment.
“The data centre investments are going to be a big boost to the power sector in India,” said Ashish Gupta, chief investment officer at Axis Mutual Fund, which has about US$40 billion in assets. Power and related costs would account for about 40 per cent of capital expenditure incurred for data centres, he said.
Also in the fray are makers of cables and wires such as Havells India (-0.5 per cent), RR Kabel (-2 per cent), and Dynamic Cables (+0.4 per cent). Ashit Mangal, managing director at Dynamic Cables, touted data centres as a “huge” opportunity in the company’s latest earnings call.
Cooling solutions
The heavy energy use from AI workload generates significant heat, needing specialised cooling systems, especially during India’s scorching summer. Blue Star (+11 per cent) and Voltas (+4.2 per cent) are among largest local companies providing such solutions that are suitable for data centres.
Server and cloud infrastructure
Beyond power and cooling, data centres also need the physical computing backbone. Netweb Technologies India (+99 per cent) is being touted as a key player in servers, storage, backup and supercomputing solutions. E2E Networks (+49 per cent) provides cloud infrastructure and managed services, with a focus on high-performance computing for AI.
Share with us your feedback on BT's products and services
