Google’s $15-bn AI Bet: A New Era for India’s Digital Economy?

What better time than Diwali for a news piece that could light up India’s digital future?

Google recently announced a $15 billion investment to build an AI hub in Andhra Pradesh’s Visakhapatnam, complete with a 1-gigawatt data centre, energy infrastructure, and fibre-optic networks, marking its biggest commitment globally and its first such AI-focused facility in India.

This mammoth project, set over the next five years, is part of the broader global “AI everywhere” wave driving tech giants to pour resources into AI infrastructure. For context, Google is spending around $85 billion this year alone to expand data centres worldwide amid surging AI demand. 

Over the past decade, India’s data centre market has attracted investments estimated at $6.5 billion, generating about $1.2 billion in revenue in 2024, according to a report by ANAROCK. Also, the industry’s capacity is set to more than double to 2-2.3GW by FY27, says a report by Crisil Ratings. 

In fact, leading sectors in AI adoption in India include industrial and automotive, consumer goods and retail, banking, financial services and insurance, and healthcare, contributing around 60% of AI’s total value, according to a government release.

Source: PIB

Now, this Big Tech’s bet raises an exciting question: what does it mean for India’s tech future, and for investors looking to ride that future? 

Why Google Is Betting Big on India

Two words: India’s digital tailwinds and policy push. Over the past decade, India has built a strong digital foundation: initiatives from Aadhaar biometric IDs to UPI mobile payments have brought hundreds of millions online. As of 2025, India boasts over 1,002 million internet subscribers, forming the world’s second-largest online population.

This means a huge market, primed for AI-driven services. In 2024, the government approved the IndiaAI Mission with a budget of ₹10,000 crore (≈$1.3 billion) to “make India a global leader in Artificial Intelligence”. This mission is funding everything from AI research centres and supercomputing GPU farms (38,000+ GPUs have already been deployed under it) to the development of India’s own large language models in local languages.

Local talent and cost advantages are another draw. According to Stanford AI Index, India ranks among the top 4 countries globally in AI skills and research capabilities and the top country for hiring AI talent, indicating the most significant rise in AI talent recruitment globally.

AI Talent Absorption

Source: Stanford AI Index 2025 Report

India’s booming demand for AI across industries makes it the place to be. Sectors like banking (BFSI), logistics, education, and healthcare are rapidly adopting AI solutions. You can also check out the top AI stocks in the stock market here. 

While Google’s bet is a landmark investment, several other global technology giants and domestic players are also making significant bets on India’s rising digital economy. 

Key Players Driving India’s AI Push

Microsoft: Announced a $3 billion investment in early 2025 to expand cloud and AI infrastructure, build new data centres, and train 10 million people in AI through its ADVANTA(I)GE India program.

AWS: Committing $12.7 billion through 2030 to strengthen India’s cloud backbone, train 5.9 million people in cloud skills, and support firms like Apollo Tyres and Dhan with AI integration.

Meta & Reliance: Partnered on a $100 million venture to build sector-specific enterprise AI solutions using Meta’s open-source Llama models.

Together, these global and local forces are turning India into a critical global hub for AI innovation and deployment.

The Infrastructure Backbone: Data Centres, Cloud & Power

Google’s bet will supercharge India’s digital infrastructure, with ripple effects across multiple sectors. 

Consider the scale: The planned 1 GW data centre campus in Visakhapatnam is enormous, nearly equal to the entire current data centre capacity of India. (India’s total installed IT load in data centres was about 1.4 GW as of mid-2025, and is expected to double by 2027, according to S&P Global Market Intelligence.)

Also, the upcoming AI hub will not only host Google’s own compute but also bolster cloud services (Google Cloud regions for Search, YouTube, Gmail, etc.) to meet exploding demand.

This build-out triggers a domino effect of opportunities across India’s economy:

Real Estate & Hyperscale Infrastructure: Indian conglomerates are already active here, e.g. the Adani Group’s AdaniConneX (a JV for data centre development) is Google’s partner on the Vizag project, and Reliance Jio (Mukesh Ambani’s firm) is also pouring money into new data centre facilities. Construction and engineering giants like Larsen & Toubro (L&T) could gain contracts to build these high-tech hubs, and real estate trusts may pivot to include data centre assets as a high-growth segment. 

Power & Green Energy: Running AI supercomputers is a power-hungry business. Data centres already consume ~0.8% of India’s electricity (13 TWh in 2024), and that could jump nearly fivefold by 2030. Google has a global goal of carbon-neutral operations, so expect investments in renewable energy farms, battery storage, and grid upgrades to support the new AI hub. Policymakers are also likely to fast-track infrastructure for reliable power – data centres need 24/7 uptime, which could drive improvements in local power distribution and backup generation. 

Telecom Networks & Fibre Optics: Part of Google’s plan is to land new subsea internet cables at Vizag (in partnership with Airtel) and to build out an expanded fibre-optic network across India. This means telecom infrastructure providers stand to gain. The government has pushed initiatives like BharatNet to connect rural areas with fibre; big private investments like Google’s will complement these by increasing core network capacity.

Hardware, Semiconductors & Electronics: The government’s production-linked incentive (PLI) schemes for electronics and semiconductors aim to bring more chip fabrication and server assembly to India. In fact, India wants to become a global chip major and has approved 10 semiconductor projects with a total investment of $18.2 billion. These include two semiconductor fabrication plants and multiple testing and packing factories. Additionally, as edge computing grows, local assembly of edge servers or AI devices might take off. 

It’s worth noting that several Indian companies are already gearing up. AdaniConneX (part of Adani Enterprises) and Airtel’s Nxtra are expanding data centre capacities. Hiranandani Group’s Yotta Infrastructure and foreign players like NTT and Blackstone (through Lumina CloudInfra) are also investing heavily in Indian server farms. The entry of Google’s mega-hub will likely attract even more such investment.

How to Play India’s AI Growth Story

One way is to look beyond individual stocks to the bigger picture. This is where thematic investing comes in, focusing on long-term megatrends and assembling a basket of assets that ride that theme. There are multiple angles to play it:

Broad Tech & Innovation Exposure: One approach is to invest in a diversified set of technology companies that are driving or benefiting from AI adoption. This could include the large-cap Indian IT services firms, consumer internet companies, and global tech players with a strong India presence (where accessible). For example, India’s top IT providers (TCS, Infosys, Wipro, HCL Tech) are rapidly expanding their AI offerings. Owning a basket of such tech leaders gives exposure to the overall AI-driven upside in software and services.

Infrastructure & Enablers: Another angle is focusing on the nuts and bolts that we discussed, the enablers of the AI infrastructure. This thematic basket would hold stocks in infrastructure, energy, and connectivity domains. By investing in this mix, you essentially bet on the foundation of the digital economy, the idea that as AI demand grows, these enabling sectors will see a steady, volume-driven upswing too.

Diversification is key: The AI theme will have winners and losers, and it spans hardware, software, and services. A thematic portfolio approach ensures you’re not betting the farm on any single company’s success, but rather on the overall trend of AI proliferating across the economy.

From an investment strategy viewpoint, capturing this long-term upswing calls for patience and diversification. One way is through curated model portfolios (available on smallcase) that focus on innovation and tech-driven growth. These allow you to hold a mix of, say, an energy company, a telecom, a tech giant, a couple of emerging tech mid-caps, all under one umbrella. 

It’s a way to position for the overall trend rather than stock-picking the eventual winners (which can be hard to foresee a decade out). Additionally, investors should rebalance periodically: as some stocks run up and others lag, ensure the portfolio doesn’t become too concentrated in one sub-segment.

Risks and What to Watch

While the opportunity is compelling, it’s important to maintain a balanced perspective. Here are key risks and considerations:

Long-term Horizon: AI infrastructure investments have long gestation periods. Data centres take 3-5 years to build and stabilise. Energy projects have similar timelines. Investors need patience and should avoid expecting linear returns quarter-to-quarter.​

Technology Obsolescence Risk: AI technology is evolving rapidly. Today’s infrastructure could require significant upgrades to remain competitive. Investors should monitor companies’ ability to adapt to technological shifts.

Market Volatility: AI-linked stocks can experience significant volatility based on global sentiment, interest rates, and competitive dynamics. Thematic portfolios are not immune to broader market corrections.

Sector-specific Challenges: Power sector risks include tariff regulations and fuel costs. Telecom infrastructure faces pricing pressure and competitive intensity. Data centres face high capital intensity and energy cost volatility.

For smallcase investors, the key is to approach AI themes with appropriate risk management, diversification, and time horizons aligned with the structural nature of the opportunity.

To Wrap Up

The coming “AI decade” will redefine how businesses operate and how value is created, much like the internet did in the 2000s. For investors, the key takeaway is to invest judiciously in the enablers and adopters of AI (and staying diversified). There will undoubtedly be hype and noise, but as we’ve discussed, the underpinnings here (infrastructure build-out, policy support, real business use-cases) suggest more gravity than a fad.

If you believe in India’s digital growth story, explore diversified stock portfolios on smallcase that align with this transformation.

Disclaimer: This analysis is for educational purposes and does not constitute investment advice. Market conditions can change, and past performance is not indicative of future results. Investors should conduct their own research and/or consult a certified financial advisor before making investment decisions.