Google invests billions of dollars in India as the AI investment wave surrounding "data centers" sweeps through the Indian stock market

According to the Zhitong Finance APP, as American tech giants Alphabet's Google, established tech leader Microsoft, and American AI leaders like OpenAI commit to investing over $10 billion in large-scale AI infrastructure in India, investors are scrambling to find local Indian companies that will benefit from this unprecedented wave of AI investment. They are collectively turning their attention to local Indian companies associated with data center construction, which will benefit from the comprehensive establishment of India's AI ecosystem.

The construction of large-scale infrastructure supporting artificial intelligence is expected to drive the development of local data center auxiliary companies, including core power equipment manufacturers and some large power generation companies. It is estimated that by 2027, the investment scale of India's data center market will exceed $100 billion. Recent data shows that a custom index tracking the stocks of 10 data center auxiliary companies has risen over 30% since April, with potential beneficiaries including data center operators, electrical and power equipment manufacturers, and liquid cooling solution providers.

The creation of the AI ecosystem provides investors with new significant investment opportunities in India's $5.4 trillion stock market. The reason this market has lagged behind the global stock market rebound this year lies in the lack of pure AI computing hardware targets like American chip giants Nvidia, Broadcom, Micron Technology, and AMD, as well as the absence of super cloud computing giants like Google, Microsoft, and Amazon that directly benefit from the surge in cloud services and cloud AI computing power.

In the Indian stock market, investors are turning to local data center auxiliary companies—from power equipment manufacturers to power generation companies—that are expected to significantly benefit from the supporting infrastructure construction for AI data centers, making it one of the hottest equity trades globally. Specifically for India's data center market, CBRE Group Inc. estimates that the investment scale will exceed $100 billion by 2027.

"India is powering its AI era by operating the core infrastructure required for AI—including server clusters and the energy capacity driving data centers," said Shambhavi Gupta, founder of the global macro insights platform Nine Spot Seven. "Unlike the tech stock market in the U.S., this round of AI investment frenzy in India's stock market is based on tangible assets."

A custom index tracking the stocks of 10 such auxiliary companies has risen over 30% since the low point caused by the impact of Trump's tariffs on the global market in April. This is nearly double the increase of the Indian stock market benchmark—the NSE Nifty 50 index—during the same period.

Tech giants from the United States are driving this momentum. Last month, Google outlined plans to collaborate with some local companies to build an AI infrastructure hub in southern India, with an initial investment of approximately $15 billion. In September, media reports indicated that ChatGPT developer OpenAI is also seeking to establish a large AI data center in India.

Earlier this year, Microsoft announced plans to invest approximately $3 billion in India to expand its cloud computing and AI computing infrastructure. Amazon has also planned to cumulatively invest about $12.7 billion by 2030 to build one of the largest AI data centers in India.

Here are some potential beneficiaries of this investment boom in Indian data centers, along with their stock performance over the past three months:

Data Center Operators and Partners

AdaniConneX Pvt. — a joint venture involving tycoon Gautam Adani's flagship Adani Enterprises Ltd. (up 2.1% over the past three months) and India's second-largest wireless operator Bharti Airtel Ltd. (up 7.3%) — is collaborating with Google on a large AI project in the port city of Visakhapatnam.

Billionaire Mukesh Ambani's Reliance Industries Ltd. (up 6.9%) is also expected to invest up to $15 billion in a one-gigawatt AI data center. According to Jefferies Financial Group Inc., these three companies could collectively account for 35%-40% of India's data center capacity by 2030.

India's largest software services exporter Tata Consultancy Services Ltd. (up 0.7%) also plans to build a large AI data center with a capacity of up to one gigawatt, while OpenAI is looking for local partners to establish its data center in India.

Meanwhile, one of India's data center pioneers, Sify Infinit Spaces Ltd., submitted an IPO application last month for ₹37 billion (approximately $417 million). India's first AI unicorn, Fractal Analytics, which provides related products and services, also submitted an IPO application in August.

Electrical and Core Power Equipment

A significant portion of the capital expenditure surrounding AI data centers is expected to flow into electrical and core power equipment, including manufacturers of core switchgear, transformers, and distribution systems.

Notable Indian stocks include: Hitachi Energy India Ltd. (down 12%), which provides end-to-end electrification equipment for data centers; Siemens Ltd. (up 2.1%), Schneider Electric Infrastructure Ltd. (down 17%), and ABB India Ltd. (down 5.3%), which provide distribution systems and industrial equipment "Investment in data centers will provide significant stimulation and boost to India's power industry," said Ashish Gupta, Chief Investment Officer of Axis Mutual Fund, which manages approximately $40 billion in assets. He emphasized that power and related costs will account for about 40% of capital expenditures for data centers.

Liquid Cooling Solutions

The high energy consumption of AI workloads, which can be described as massive, generates a lot of heat, especially during the hot summer months in India, necessitating the most advanced liquid cooling systems available globally today. Blue Star Ltd. (+11%) and Voltas Ltd. (+4.2%) are undoubtedly among the largest domestic companies in India providing such advanced liquid cooling solutions suitable for data centers.

Servers and Cloud Infrastructure

In addition to power infrastructure and cooling systems, the establishment of large-scale AI data centers in India also requires increasingly substantial physical computing backbones. Netweb Technologies India Ltd. (+99%) is seen as a key player in server, storage, backup, and AI supercomputing solutions. E2E Networks Ltd. (+49%) is dedicated to providing cloud-hosted services for AI computing infrastructure and artificial intelligence inference workload systems, focusing on AI computing hardware and high-performance computing