AI Enablers Surge 60% Amid Indian Market Slump

The Indian stock market has been criticized for its lack of foreign investment due to the absence of an AI trade. However, beneath the benchmark indices, a group of companies is emerging as a key player in the build-out of AI infrastructure.

Goldman Sachs has identified 42 'AI Enablers' across power, data centers, and semiconductors, which have surged about 60% while the Nifty has fallen 12%. These companies are mostly small- and mid-caps in capital goods, utilities, and technology hardware.

However, valuations are not cheap, with AI Enablers trading at about 36 times forward earnings, an 85% premium to MSCI India. Goldman Sachs attributes this premium to their stronger earnings growth.