Adani Group's aggressive bet on green-powered data centres is emerging as one of India's most compelling artificial intelligence (AI) investment themes, sparking a rally across its energy-linked companies.

The conglomerate's ambitious plan to invest $100 billion by 2035 in AI-ready digital infrastructure has positioned it as a potential backbone supplier for global hyperscalers looking to scale operations in India.

Riding on the twin tailwinds of booming AI demand and surging electricity consumption in the country, shares of Adani Power Ltd, Adani Green Energy Ltd and Adani Energy Solutions Ltd (formerly known as Adani Transmission) have surged nearly 50 per cent over the past three months.

Abhay Agarwal, Founder & Fund Manager at Piper Serica, believes Adani Group, being deep-pocketed, is a good proxy play for AI infrastructure in India as of now. "Absolutely. This is a deep-pocket play. You know, this is not something that you can do without deep pockets because a very large amount of capital will be required. And this is a very critical infrastructure, as critical as airports, roads, railways and power," he added.

Agarwal said rising AI adoption across consumer and enterprise segments is creating a strong need for domestic AI infrastructure, especially large-scale data centres.

"Usage of AI is increasing across the board, both at consumer level and at enterprise level. What is very important is that there has to be infrastructure in form of data centres that support this AI usage, and it doesn't have to go outside the country, because that creates multiple challenges of data transfer, latency and costs. So I think it's very important for India to build very large AI-oriented data centres, which are not going to be cheap to build because these are not the regular or traditional data centres. These will require cutting edge processing machines, GPUs, cooling systems and power infrastructure, which is going to be very important to drive these data centres. So I think that's why it's only large groups that can back this kind of infrastructure, and I think it's good to see Adani taking a lead and going for a much bigger picture. So I think this is good to know that even in AI infrastructure, we are focused on scaling up even if we haven't been able to do much on the AI foundational models," he also said.

He further noted that India has so far lagged in developing sovereign large language models (LLMs), though companies are increasingly adopting AI tools to enhance productivity and competitiveness.

AI push could bring FPIs back to India

Market veteran Arun Kejriwal stated that companies entering the artificial intelligence (AI) space would require substantial financial backing.

"Anything in AI, you have to be deep-pocketed. Because at least for the next one to three years, you will be investing and you are unlikely to get much," Kejriwal said.

He noted that only businesses with established operations and surplus cash flows would be in a position to capitalise on the AI opportunity. Referring to the Adani Group, Kejriwal said the conglomerate could benefit from the AI push, though returns may take time to materialise.

"Only those people who are well entrenched in various businesses and who can generate surplus cash for investment in AI stand to benefit. With that being said, Adani can gain from this, but when the benefits will start coming, we will have to see. For now, it is at an investment stage, then the productive stage will come, and then returns could be expected," he added.

The market expert also said the group's growing focus on AI may support the return of foreign portfolio investors (FPIs) to Indian equities, amid increased allocations to other Asian markets such as South Korea and Taiwan.

Adani eyes AI growth, future value unlocking

Kranthi Bathini, Equity Strategist at WealthMills Securities, said Adani Group is investing in future growth opportunities, particularly in data centres and AI-related prospects.

He noted that the flagship entity of the conglomerate -- Adani Enterprises Ltd -- has historically acted as an incubating company, nurturing several infrastructure and emerging businesses over a long period. According to Bathini, once these incubated businesses reach maturity, the group could look at unlocking value from them in the future.

Adani's data center push is centered on AdaniConneX Pvt, which has outlined plans to build 5 gigawatts of capacity by 2035. AdaniConneX is a joint venture (JV) between the Adani Group and US-based EdgeConneX. Meanwhile, shares of Adani Enterprises have climbed over 13 per cent in the last three months.