India's AI Trade Sees Earnings Upgrade Cycle Amid Nifty 500 Decline
Goldman Sachs has identified an interesting trend in India's AI trade. Despite the broader Nifty 500 index experiencing a 2% drop in calendar year (CY) 2027 earnings-per-share (EPS) estimates, Goldman's 'AI Enablers' group of companies is seeing sharp increases in EPS estimates.
The 42-company basket of Indian 'AI Enablers' has seen CY27 EPS estimates rise by 22% so far this year. This growth is primarily driven by data-centre hardware, which has seen estimates increase by a staggering 95%. Power equipment and semiconductor materials have also experienced upgrades, with increases of 15% and 8%, respectively.
However, not all companies in the AI infrastructure build-out are benefiting equally. Estimates for data-centre developers have been cut by 15%, while those for power generation have fallen by 14%. This divergence in earnings estimates is surprising, given the striking gap in stock-market performance between India's AI-related stocks and the broader market.