Even as India continues to lag markets such as South Korea and Taiwan in direct exposure to the AI and semiconductor cycle, a different AI-linked investment theme is gathering momentum at home.
India's data centre industry is entering a multi-year growth phase, driven by accelerating digitalisation, rising cloud adoption and growing artificial intelligence demand. According to international brokerage Nomura, India's data centre IT load has expanded from around 350 MW in 2019 to nearly 1.5-1.6 GW in 2025, translating into a CAGR of about 29%, compared with roughly 20% globally. As a result, India's share of global data centre capacity has increased from around 1.5% in 2019 to approximately 2-3% in 2025.
The market has already begun pricing this opportunity. Several companies linked to data centre infrastructure, power equipment, cables, networking and AI hardware have delivered outsized returns this year, with some stocks surging as much as 477% in 2026 alone. The bigger question for investors now is whether the rally still has room to run.
Sterlite Tech leads the charge
Sterlite Technologies has emerged as the biggest winner from the theme, soaring 488% in 2026. Yet analysts believe the rally may not be over. Hong Kong-based CLSA expects the stock to climb another 11% from current levels following the company's $1 billion order win from a US hyperscaler.
According to the brokerage, the order significantly strengthens Sterlite's positioning in AI data centres while improving medium-term growth visibility. CLSA expects the deal to reinforce the company's competitiveness in global markets and is now modelling a 49% EBITDA CAGR between FY26 and FY29 while maintaining an "Outperform" rating on the stock.
HFCL's turnaround gathers pace
HFCL has also been among the standout performers, gaining 170% in 2026. The March quarter marked a sharp turnaround for the company. Revenue nearly doubled year-on-year to Rs 1,824 crore, EBITDA swung to Rs 315 crore from negative territory a year earlier, while profit after tax improved to Rs 184 crore from a loss of Rs 83 crore.
"The structural shift is real. Product revenue has grown from 27% of the mix in FY21 to 59% in FY26, and exports now account for 41% of revenue. That's a business fundamentally changing its character," said Balaji Rao, Research Analyst at Bonanza.
Nomura's preferred data centre plays
Among traditional industrial and power equipment companies, Nomura has identified six major beneficiaries of India's data centre buildout: GE Vernova T&D India, CG Power, ABB India, Siemens, Hitachi Energy India and Cummins India. The brokerage's top picks are GE Vernova T&D India and CG Power.
Nomura has maintained a target price of Rs 5,675 on GE Vernova T&D India, implying an upside of about 17% from current levels. For CG Power, it has set a target price of Rs 1,050, indicating potential upside of 19.4%.
Nomura noted that GE Vernova, the parent company of GE Vernova T&D India, is among the world's largest suppliers of grid infrastructure for hyperscale data centres, while the Indian subsidiary is increasingly emerging as a key manufacturing and export hub for the group.
The brokerage said localisation investments have helped GE Vernova T&D India become a cost-competitive export base for air-insulated switchgear (AIS) and gas-insulated switchgear (GIS) equipment serving Europe, the Middle East and Africa. These markets are witnessing simultaneous grid modernisation and rising power demand from data centres, creating a long-term growth runway for the company's high-voltage equipment business.
CG Power riding hyperscale demand
For CG Power, Nomura believes the company is emerging as a direct beneficiary of rising data centre investments in both India and the United States.
The brokerage highlighted the Rs 900 crore transformer export order secured in January 2026 from US-based Tallgrass Integrated Logistics for a hyperscale data centre project as evidence of the opportunity.
Nomura estimates that transformers and switchgear account for 15-20% of total capital expenditure in both traditional and AI-focused data centres and expects CG Power to deliver a 31% earnings-per-share CAGR between FY26 and FY29.
Apar Industries gains from cable demand
Nomura also sees upside in Apar Industries, assigning a target price of Rs 14,240, implying potential upside of around 14%. According to the brokerage, Apar's cables portfolio is positioned to benefit significantly from rising data centre investments. The company is already gaining traction in the premium data centre cable segment and has supplied products to major data centre projects in the United States.
Nomura noted that ongoing capacity expansion will allow Apar to manufacture more sophisticated cable products tailored to US data centre requirements. Management has guided for 25% cable revenue growth in FY27 and is targeting segment revenue of Rs 10,000 crore over the medium term.
Cummins a key power generation beneficiary
Cummins India remains another major beneficiary of the data centre buildout, according to Nomura. The brokerage estimates that data centres currently contribute 30-35% of Cummins India's power generation segment revenue and expects the business to grow at a 20% CAGR between FY25 and FY29.
However, Nomura has maintained a Neutral rating and a target price of Rs 6,000, implying upside of about 11%, citing margin pressures from rising commodity prices, particularly pig iron and copper. The brokerage expects these headwinds to persist through the first half of FY27 despite the company's 8-10% price increases.
Siemens, ABB also in focus
Nomura has a Neutral rating on Siemens India but remains positive on the long-term demand outlook. The brokerage said Siemens management expects India's installed data centre capacity to expand from 1.5-2 GW currently to 10 GW over time. Siemens' products account for a critical share of data centre capital expenditure, and the company currently caters to 10-20% of total project spending while ranking among the top one or two suppliers in several product categories.
For ABB India, where Nomura has a Reduce rating, the brokerage highlighted large order inflows worth Rs 7.6 billion during the first quarter of CY26. These included a Rs 3.6 billion order for low-tension panels, packaging and e-house solutions, including UPS and auxiliary power equipment for data centres.
Netweb riding India's AI infrastructure push
Another stock that has benefited from the AI infrastructure theme is Netweb Technologies. The stock has gained nearly 60% in 2026 and is up 147% over the last year.
ICICI Securities maintains a Buy rating, citing strong visibility from government-backed sovereign AI infrastructure projects. The brokerage noted that the company's strategic demand order worth Rs 21.8 billion remains on track, with some spillover into Q1FY27.
Netweb has reiterated its organic revenue growth target of 35-40%, while the remaining Rs 16.2 billion of strategic orders are expected to be executed during FY27. The brokerage also highlighted a strong AI-led pipeline for the next 18-24 months and said EBITDA margin guidance remains intact at 13-14%.
All in all, the broader opportunity remains substantial. As AI adoption accelerates and data centre investments gather pace, the beneficiaries are increasingly extending beyond technology firms to power, equipment, cable and infrastructure suppliers. While several stocks have already delivered outsized returns in 2026, brokerages believe India's data centre buildout remains in its early stages, leaving room for select players to participate in the next leg of growth.
( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
