Top Artificial Intelligence Stocks In India to Watch In 2025
India is leading in AI adoption as 30% of Indian companies are leveraging AI1. It has become an integral part of our lives, and it will continue to do so in the near future. Therefore, AI stocks have gained investors' interest because of their growth potential.
The AI market in India is expected to grow by 26.37% from 2025- 20312. Several companies in India are prepared to capitalise on AI expansion across multiple sectors like IT, fintech, defence, etc. Let us take a look at the top artificial intelligence stocks in India that should be on your radar in 2025.
What Makes A Stock An ‘AI Stock’?
AI stocks are not just about the IT and tech sectors. As AI finds its use in many sectors, understanding what makes a stock an AI stock is important. These can be classified based on how the company operates:
1. Core AI Companies: These are firms that are building AI models or platforms. For example, Infosys is a global IT leader that has incorporated AI as one of its primary services. Persistent Systems, Zensar Technologies, and Affle India are more examples of core AI companies.
2. Enablers: Enablers dominate their industry with AI-powered tool offerings. For example, Tata Communications has introduced AI cloud infrastructure powered by NVIDIA Hopper GPUs. Orient Technologies is another example that offers many AI development services.
Both types - core AI and enabler companies- are set to benefit from the growth of the AI sector in India.
AI Use Cases: From Manufacturing To Fintech
In the manufacturing industry, AI is powering demand forecasting, predictive maintenance, warehouse automation, etc. The banking sector has become more user-friendly with the use of chatbots to answer common customer queries. Fintech extensively uses AI for underwriting and customer assessment. In healthcare, AI-based patient care offers personalised treatments.
Further, generative AI technology is used in the pharmaceutical industry to create new drugs and innovate treatment strategies for improved patient outcomes.
Metrics To Evaluate AI-driven Businesses
AI is used in several businesses now, but not all businesses that use AI can succeed. Here are some key metrics that investors can use to evaluate an AI business.
1. Innovation Curve – Investors wait and watch for S Curve innovation, where innovation by a company peaks, stagnates, stabilises, and follows this pattern. It helps you understand whether the technology can become mature.
2, Spectrum of AI – Many Indian companies are working on various subsegments in the AI space that can evolve faster. Companies that do niche work can have a better scope for growth. Many small-cap companies continue to innovate in India, and observing these stocks can give you an idea of whether or not to invest in such companies.
3. Path to profitability – The companies working in the AI space usually face losses during the early years. But if they have a clear and achievable path, it can turn out to be profitable. So, you can explore the long-term viability of the company and explore whether they are working with proprietary technology that has a greater potential to take off.
4. Revenue growth – Investors always look for revenue growth in a company. Companies that burn cash at a faster rate without generating revenue that justifies the cost may not be on the growth path. You can follow the 1-year, 3-year, and 5-year revenue metrics to understand this growth.
5. Competitive advantage – While many companies operate in the AI space, it is important to know whether the company you are interested in has a competitive advantage in its space. A company that has a greater potential to capture a larger market share can be profitable for investors.
Top Artificial Intelligence Stocks In India To Watch In 2025
Some of the top types of AI stocks to watch out for are:
1. Tech Titans with AI Edge: Technology giants in India, such as TCS, Infosys, HCL Technologies & Wipro, have become pioneers in creating AI solutions, and they also offer various consulting services. Such companies are expanding their AI offerings to profit from the growth of the AI sector in India.
2. Mid-Cap Innovators: Mid-cap companies such as Zensar Technologies, Tech Mahindra, Persistent Systems, etc, are also leading innovators that can profit from AI growth in India. These companies have shown steady growth in recent times.
3. Niche Players and Startups: Specialist players in the AI field, such as Intellect Design Arena, Affle (India), etc, are using AI to become leaders in their industry. These companies have a good potential growth trajectory, provided they continue to cater to the evolving needs.
Also Read: Top Alternative Investment Funds In India
How To Invest In AI Stocks In India
To invest in AI stocks in India, you have to consider the following factors:
1. Identify AI Weightage: Understanding the company fundamentals is crucial to succeed with any stock, and stocks in the AI sector are no exception. Review the annual reports and earnings, but look for AI-specific revenues. This helps you understand whether the company is growing due to its AI innovations.
2. Diversify Across Cap Categories: Include stocks of blue-chip and mid-cap companies in your AI stock portfolio. This can help you capitalise on the steady expected growth of blue-chip companies as well as the explosive potential of mid-cap companies and balance your risk-reward potential.
3. Track Partnerships and Contracts: Another important factor to consider is whether the company has partnerships and contracts with other industry leaders. For instance, Wipro has partnered with Entrust to create Gen-AI-powered support platforms3.
4. Use Mutual Funds/ ETFs: Many theme-based mutual funds are now available to invest in AI stocks in India. The Mirae Asset Global X Artificial Intelligence & Technology ETF is another example of this category of investment.
5. Stay Updated: Monitor quarterly results of the companies you are interested in and follow the R&D announcements. These can give you a better analysis of the company's growth potential.
Risks In AI Stocks And Strategies To Diversify
Risks in AI stocks match their reward potential. AI stocks can swing sharply based on the competitors in the market. For example, ChatGPT was hailed as a leader in generative AI, but the introduction of DeepSeek shook the generative AI market. Even though Indian companies do not operate at that scale in the current scenario, the volatility among Indian AI companies is also high.
Further, Indian AI companies are not fully mature yet, so there is a higher execution risk with respect to model failures and R&D issues. Premiums do not always translate to returns, and valuation bubbles could mislead investors.
The best way to mitigate risks with AI stocks is to combine the stocks of large, stable firms with growth-oriented midcap companies. While AI startups can create some buzz, there are huge risks in investing in brand-new companies.
Ideally, you can consider using SIPs or other forms of staggered investments to gradually increase your investments in AI stocks. Setting appropriate exit thresholds can help you book profits and exit at the right time.
Conclusion
The AI sector in India is gaining momentum. With the increase in demand for AI solutions and platforms, investments in AI are far more appealing. Major IT services giants lead the way, but niche firms and mid-cap companies bring about fast-paced growth, kindling the interest of investors. With a balanced approach and careful consideration of diversification and fundamentals, investors may manage risk by evaluating company fundamentals and diversifying by market cap.
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FAQs On Artificial Intelligence Stocks In India
1. Is it safe to invest in AI stocks in India in 2025?
AI stocks carry high volatility. While outcomes are uncertain, risk can be managed to determine whether it's safe to invest in AI stocks. It's crucial to create a balanced portfolio with risk balance by integrating blue-chip stocks and mid-caps.
2. How do I evaluate the potential of an AI-driven company?
Similar to analysing every stock, look for the growth potential of the company. Take a closer look at the AI revenue share and R&D spend. Measure whether the AI investments are turning into revenue. Also, pay attention to the contract pipeline and the overall CAGR of the company.
3. Are there any AI mutual funds or ETFs available in India?
Yes, many AI mutual funds and ETFs are available with varied risks. You can explore many such options on Grip Invest to know more.
4. What sectors are seeing the most AI adoption in India?
AI adoption is higher in sectors like IT services, fintech, healthcare, manufacturing, ecommerce, and defence.
References:
1. Economic Times, accessed from: https://cio.economictimes.indiatimes.com/news/artificial-intelligence/india-is-leading-in-ai-adoption-at-30-surpassing-global-average-of-26-bcg-report/115201819
2. Statista, accessed from: https://www.statista.com/outlook/tmo/artificial-intelligence/india
3. Business Standard, accessed from: https://www.business-standard.com/markets/capital-market-news/wipro-bags-multi-year-deal-from-entrust-to-accelerate-growth-strategy-125060400133_1.html
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