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Positive on AI infra build-out; selective within IT

ICICIdirect Research 05 Dec 2025 DISCLAIMER

The AI infrastructure build-out theme in India picked up more momentum this week, led by reports of a potential OpenAI–TCS partnership. Media sources suggest that OpenAI is in advanced talks to anchor its India expansion under the Stargate programme by leasing around 500 MW of AI-ready data-centre capacity from TCS’ HyperVault and jointly building agentic AI solutions for large enterprises.
If this goes through, it would be OpenAI’s first big infrastructure commitment in India and follows the recent Google–Reliance AI collaboration. Together, these moves make it clear that India is quickly becoming a key hub for AI model training, data-residency work, and industry-specific GPT solutions.
For TCS, this potential partnership would give strong early validation to its GW-scale HyperVault roadmap announced in Q2. Plus, the co-development of agentic AI tools can help TCS deepen its enterprise relationships and boost adoption of India-residency AI solutions. Overall, this is a solid structural positive for TCS’ medium-term AI journey.
On the market side, the broader IT sector has seen a healthy correction, with Nifty IT down about 14% over the past year, bringing valuations for many Tier-1 and mid-tier names back to more reasonable levels. But near-term demand remains mixed, and AI monetisation is still at an early stage. Given this setup, we prefer to stay selective, focusing on companies with clearer AI-led revenue visibility, strong balance sheets, and differentiated capabilities. Our top picks are: TCS, Coforge, and Newgen.

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