Mint Explainer | US AI sell-off: Are Indian AI-linked stocks next?

Résumé détaillé

A US tech sell-off is putting Indian AI-linked stocks under pressure. From data centre plays to IT services, how exposed are Indian companies to a global AI bust?

A month of losses in US technology stocks has revived fears of an AI bubble. The sell-off has spread to Indian companies riding the AI buildout, from data centres to power and cooling suppliers. Though India lags in foundational AI, its listed firms are exposed to the global investment cycle. Are India's AI and IT stocks headed for a similar reckoning? Mint explores.

In September, Goldman Sachs identified 42 Indian companies outperforming global and Asian AI stocks. Of these, 34 fell an average 7% in October, a Mint analysis shows.

Anant Raj, a data centre operator, and Himadri Speciality Chemical, a supplier of materials used in cooling systems, led the losses, falling 25% each. Bharti Airtel and Blue Star were among the few major gainers.

The sell-off mirrored a broader correction: the Nasdaq fell 5% in October, with Intel down 45%, Google 19%, and Meta 15%.

Investors are questioning whether generative AI can deliver returns to justify the hundreds of billions of dollars being invested in it. AI has yet to demonstrate consistent productivity gains or create higher-quality jobs to offset those displaced, while cybersecurity and sensitive enterprise data risks remain concerns.

The sell-off deepened as Amazon, Google, Microsoft and Meta pledged further data centre investments, even as some reported earnings below Street expectations. The question is no longer whether AI will grow, but whether it can generate enough revenue and profits to justify the spending.

Data centre infrastructure suppliers have been among the biggest beneficiaries. Goldman Sachs's September report valued the 42 identified companies at a combined $670 billion. These span power generation, transmission, electrical equipment and cooling, including Tata Power, Adani Green Energy, Cummins India and Blue Star. They stand to benefit from data centre expansion regardless of which AI platforms win.

IT services companies such as Tata Consultancy Services and Infosys have more indirect exposure, depending on…

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