Small Indian companies involved in data center and artificial intelligence infrastructure are set to become some of the stock market’s biggest winners in 2026, even though India does not have many major AI software or semiconductor companies.
According to a report by , these companies are benefiting from the huge amount of money being spent around the world on building AI infrastructure like data centers. bloomberg.
The biggest example of this is Sterlite Technologies Ltd, an optical-fibre company owned by the Vedanta Group. Sterlite Technologies shares are set to surge more than 530% in 2026, Bloomberg reports. The company received a $1.1 billion multi-year contract from the US-based hyperscaler due in May 2026. Sterlite’s rival HFCL Ltd has seen its shares rise 191% this year, according to Bloomberg.
AI is leading the stock rally
The value of MTAR Technologies Ltd., which makes precision cooling and power components, has more than tripled this year. Bloomberg tracked 28 Indian companies involved in the data-center supply chain, including makers of transformers, switchgear, wires, cables and cooling equipment. These 28 companies together are projected to add approximately $47 billion in market value in 2026. Their combined market value has increased by almost 50% this year.
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Investors in Mumbai have started calling this trend “AI capex trade”. R Shivakumar, chief investment officer at Axis Mutual Fund, told Bloomberg that India may not be the leader in the race for AI software, but it could benefit from spending on AI infrastructure. Shivakumar said investors should focus on companies involved in data centers and broader infrastructure supply chain.
Big Tech’s bet on India!
Global technology giants are investing billions of dollars in India’s AI and cloud infrastructure. Amazon plans to invest $12.7 billion in cloud infrastructure in India by 2030. Alphabet is investing about $15 billion in an AI infrastructure hub in Visakhapatnam. A joint venture involving Reliance Industries signed an $11 billion deal to build local data centers through 2025. AdaniConnex has partnered with Google and Uber Technologies to help build the data center.
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Nomura analysts said the biggest opportunity lies in companies that supply the equipment needed to build, power and cool data centers, Bloomberg reported in a previous report. Nomura described these suppliers as the “picks and shovels” of the AI boom. Nomura said the waiting period for delivery of some components is now two to four years because demand is so high.
This shortage has created a strong sellers’ market for equipment manufacturers. As Bloomberg reports, Nomura said many of the orders won today will generate revenue between 2027 and 2029.
India has been one of the underperforming stock markets globally as it lacks large AI-focused companies and semiconductor manufacturers. However, India’s industrial companies are benefiting from the growing need to support global AI infrastructure. Companies like Hitachi Energy India Limited, ABB India Limited and Cummins India Limited are among the beneficiaries of this trend.
Brokerage Angel One said investors believe AI is creating a long-term infrastructure investment cycle, not just a software opportunity. Angel One said this confidence is driving rapid growth in companies like Sterlite and MTAR. Angel One estimates that global investment in hyperscale data centers could exceed $1.2 trillion between 2025 and 2027.
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AI stock rally faces valuation risk
Angel One said the market is rewarding companies that are already showing AI-related earnings rather than just talking about AI opportunities. Angel One warned that high valuations were becoming a risk as many stocks had already risen sharply. The brokerage said there is little room for mistakes or disappointing results at current prices.
Sterlite Technologies is trading at around 70 times expected earnings for the next 12 months. Comparatively, the NSE 500 index trades at around 19 times forward earnings. Despite concerns about valuation, analysts remain overwhelmingly positive about the long-term opportunity.
Nomura described data-center spending as the largest industrial investment cycle in the world today. Nomura said the current data-center boom is larger than the global 4G wireless rollout, post-2008 LNG infrastructure expansion and the shale boom of the early 2010s. The key finding is that even though India may not have many global AI software champions, a large group of industrial and infrastructure companies are quietly making huge profits from the global race to build AI data centers.
