India’s Lack of AI Trade Pushes Investors Toward Risky High-Growth Bets

n 2025, India’s stock market is facing an unusual problem. While many countries are enjoying a boom in Artificial Intelligence (AI)–related companies, India’s public markets are missing out. Investors who want to benefit from the global AI wave are finding that there are very few options listed on Indian exchanges. As a result, they are putting their money into other fast-growing but risky sectors — from renewable energy and digital platforms to electronics manufacturing and financial technology.

Why AI matters in global markets

Over the past two years, AI has become the biggest investment story in the world. From the United States to South Korea, companies that build or use AI at scale — like chipmakers, data companies, and software developers — have seen their stock prices skyrocket. Investors everywhere are chasing what they call the “AI premium.”

But in India, this premium barely exists. The country’s largest tech firms, such as Infosys, TCS, and Wipro, make most of their money from outsourcing and IT services, not from developing AI products. They are experimenting with AI tools, but the revenue impact is still small. Compared to American giants like NVIDIA or Microsoft, Indian tech firms have very little direct exposure to the AI industry.

Because of that, India’s benchmark stock index, the Nifty 50, has gained only about 7% so far in 2025. Meanwhile, the broader MSCI Asia ex-Japan index has grown almost 27%, fueled by AI-driven optimism in other markets.

Where the money is going instead

Since there are few AI opportunities in India, investors are chasing other high-growth themes. Renewable energy is one of the biggest. Companies involved in solar, wind, and green hydrogen are attracting attention as the government pushes for clean-energy targets. Another hot area is electronics manufacturing, supported by the “Make in India” initiative.

Digital platforms — especially those in fintech, e-commerce, and digital payments — are also seeing a rush of investment. These sectors promise fast growth, but they are also volatile. Prices can swing sharply based on small pieces of news, regulations, or global sentiment.

The problem of volatility

This search for alternatives has made the Indian market more unpredictable. Foreign institutional investors (known as FPIs) have sold more than $17 billion worth of Indian shares in 2025, one of the largest outflows ever. Many of them have shifted money to markets like China and South Korea, where AI investments are booming.

Meanwhile, domestic investors — mostly retail buyers and mutual funds — are still confident. They believe India’s long-term story remains strong: a growing middle class, rising consumption, and government support for business. These local investors are helping to keep markets stable, even as foreign funds leave.

Why India’s AI presence is small

India’s limited presence in AI is not because of a lack of talent. The country has one of the largest pools of software engineers and data scientists in the world. Many of them work for global tech companies or startups abroad. The challenge is that India’s public market doesn’t yet have large AI-focused companies.

Startups are doing exciting work in generative AI, healthcare AI, and automation, but they are still private. Without being listed on the stock exchange, everyday investors can’t invest in them. This gap means that, unlike in the U.S. — where AI firms dominate the market — Indian investors don’t have easy access to AI growth stories.

What this means for the future

The lack of AI exposure could slow India’s market performance in the short term. As global investors continue to focus on AI, countries with strong AI industries will attract more capital. However, this also opens a door for India to develop its own AI ecosystem.

If India can encourage more research, innovation, and AI-focused startups, it could quickly catch up. The government’s “Digital India” and “AI Mission” programs aim to do just that — by funding AI projects, training workers, and building data infrastructure. Over time, some of these companies may grow large enough to list publicly, giving investors new opportunities.

The bottom line

India’s stock market is strong but missing a key ingredient: AI. Without big AI players, investors are being pushed toward other fast-growth industries that offer excitement but also higher risk. For now, India’s domestic investors are keeping the market steady, but the country’s next big opportunity may come when AI innovation starts to show up in its public companies.

In the long run, India has the talent and ambition to build a strong AI sector — it just needs time, support, and capital to make it happen. When that day comes, investors might finally find the AI trade they’ve been waiting for right at home.