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IT Market Wrap: India emerges as a global AI build-out hub

ICICIdirect Research 19 Dec 2025 DISCLAIMER

Over the last ~1-1.5 years, the AI-led rally has clearly played out in markets like the US, China, Taiwan and Korea while India, especially Indian IT, has largely lagged this theme. This reflects in the Nifty IT index decline of ~17% over the last one year, while the NASDAQ Composite is up around 14% in the same period.


However, we think this could change going ahead.  We’re beginning to see early green shoots on the global capex side with large global players committing serious money towards AI and data infrastructure in India with Amazon and Google announcing a $35 billion and $15 bn investment by 2030 and Intel also ramping up its capital commitments.


Now, while India may not yet be a big player in advanced semiconductor manufacturing, there is a very strong opportunity in building large-scale data centre capacity. A case in point here is TCS which has announced a GW-scale data centre, with a total potential investment of around $6-7 billion over the next 5-7 years. Importantly, around 500 MW of this capacity is likely to be contracted by OpenAI, as per media reports.


Additionally, support from rupee depreciation vs the US dollar (~5.1% depreciation in 6 months) shall aid mid-single-digit revenue & margin tailwinds.


This signals a clear shift in strategy wherein Indian IT companies, are looking beyond traditional services and positioning themselves around AI-led infrastructure and enterprise demand. Thus, we believe Indian IT could shape up as a strong contra play from here.

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