Mint Explainer | US AI sell-off: Are Indian AI-linked stocks next?
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.
How did Indian AI-linked stocks perform against US Big Tech in October?
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%.
What triggered the sell-off in US technology stocks?
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.
Which Indian companies have benefited most from the AI boom?
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 enterprise AI adoption and demand for services built around products from OpenAI, Anthropic and others.
How different are the Indian and US AI markets?
Quite different. The US is developing foundational AI technology, while India remains largely a market for deploying and selling those products. Even domestic model developers such as Sarvam lag far behind US rivals in scale and reach, having raised just 0.2% of Anthropic's $140 billion.
India remains primarily a services and consumption market, with businesses selling and implementing products from Google, Microsoft and OpenAI. US technology companies see India as their biggest consumption market, with ChatGPT alone crossing 100 million weekly active users.
Why are economists worried about an AI implosion?
Investors remain unconvinced that AI is generating returns to justify the capital pouring into it, experts told Mint. Anthropic's IPO papers underscore the uncertainty: despite seeking a valuation close to $2 trillion, the company acknowledged it may not become profitable, citing rapid technological change and uncertain enterprise demand.
The West Asia conflict has added to global market jitters, compounding concerns over expensive tech stocks and lofty AI return expectations.
India faces a double risk: spillover from the US sell-off and its failure to produce a homegrown AI application that can compete at scale with ChatGPT, Claude or Gemini. Its investment thesis rests on a projected $250 billion data centre boom, but the buildout is still underway and returns remain unproven.