Despite being a global software powerhouse, India has been perceived as a laggard in the artificial intelligence space, with no current domestic chip industry or full-scale foundational AI model . But that narrative is set to change, according to Macquarie. The narrative of India as an AI bystander could shift to it being an “AI powerhouse that leverages its unique data sets and massive infrastructure build-out to underwrite a new era of growth,” the global brokerage said in a report on Wednesday. The Indian market has underperformed its Asian peers over the past year as global capital flows have favored AI plays in China and chipmakers in Korea and Taiwan. Foreign institutional investments in Indian markets currently stand at around $700 billion, while Taiwanese chipmaker TSMC’s foreign ownership alone is worth $1.2 trillion, said Nitin Jain, chief executive and director of Kotak Mahindra Asset Management Singapore, highlighting how AI has shaped capital flows in the region. Yet, according to Macquarie, India’s AI story is “nascent,” not “complacent.” Nascent AI play The brokerage highlighted that over $400 billion has flowed into India’s AI ecosystem, with most of the investment directed towards data centers and energy infrastructure. “Sceptics of India’s AI trajectory should be aware that the digital rails are in place,” Macquarie said, noting that the government, as well as domestic and international companies, are ramping up investments in the AI ecosystem. Global interest in India’s data center sector has risen sharply amid growing AI workloads. In December last year, Microsoft and Amazon pledged more than $50 billion toward India’s cloud and AI infrastructure in under 24 hours. Just months before, Google announced a $15 billion investment to build its largest data center hub outside the U.S. in India. As recently as Monday, three global private equity firms — Alpha Wave, Carlyle and Anchorage Capital — invested over $700 million in Indian telecom giant Bharti Airtel ‘s data center business. Added to this, 10 semiconductor projects are currently underway across six states in India, with a total investment of $18.2 billion. “We believe policy, capital, and enterprise are coming into alignment,” Macquarie’s report said, adding that it sees the Indian AI ecosystem “forming across talent, startups, and enabling infrastructure.” Early AI bets Macquarie said the initial beneficiaries of India’s evolving AI ecosystem will be “picks‑and‑shovels” players operating across computing, data centers, power, cooling, connectivity and semiconductors. The brokerage highlighted a basket of 12 stocks it sees as the best plays on the evolution of this nascent ecosystem. Reliance Industries , which has announced investments of $110 billion in AI infrastructure , as well as India’s second-largest telecom company Bharti Airtel, and leading Indian software services firm Tata Consultancy Services are among the best bets in India’s AI space, the brokerage said. State‑owned Power Grid Corporation , along with Indian subsidiaries of ABB , Siemens , and GE Vernova , are also expected to benefit from the wave of AI infrastructure build‑out, Macquarie said. Fiber‑optic cable maker Sterlite Technologies , backup power generator manufacturer Cummins India , and wires and cables company Polycab India are also part of Macquarie’s basket. The brokerage additionally highlighted non‑listed firms positioned for the “next layer of value creation,” including Sarvam AI, which is building India’s sovereign AI model, and software‑as‑a‑service company Zoho, which is developing AI applications. Yotta Data Services, which plans to go public by early 2027, also featured on the list. This unlisted Indian data center company is building Asia’s largest AI computing hub using Nvidia Blackwell Ultra chips. India accounts for 5.7% of AI companies founded globally between 2008 and 2025, ranking fourth after the U.S., China, and the U.K, as per Macquarie. However, in funding terms, India ranks third, attracting 2.3% of global capital during the period. The U.S. captured more than 76% of total funding, while China secured 8.4%.