Beyond Vedanta: The other Anil Agarwal stock that just exploded 500% on AI boom

The artificial intelligence boom is no longer confined to global technology giants. In India, it is creating a different set of stock market winners: optical fibre manufacturers.

No company has captured investor imagination more than Vedanta-backed Sterlite Technologies. The stock has surged an astonishing 500% in 2026, turning into one of the market's standout performers. The rally has translated into a dramatic wealth creation story, with the company's market capitalization swelling from just over Rs 4,000 crore at the start of the year to around Rs 30,000 crore in six months.

At the centre of this theme is a simple reality. As AI adoption accelerates worldwide, the need for high-speed connectivity infrastructure is rising sharply, and optical fibre is emerging as a critical building block of that ecosystem.


While multibagger returns in a short span are not uncommon in Indian markets, a 500% gain in six months probably is.

Why Sterlite Tech rallied the way it did?

The country's data centre industry is entering a prolonged expansion cycle, supported by accelerating digitalisation, rising cloud adoption and growing demand for artificial intelligence infrastructure. According to international brokerage Nomura, India's data centre IT load has increased from around 350 MW in 2019 to nearly 1.5-1.6 GW in 2025, representing a CAGR of about 29%, significantly ahead of the global growth rate of roughly 20%. Consequently, India's share of global data centre capacity has climbed from around 1.5% in 2019 to approximately 2-3% in 2025.

The opportunity extends far beyond India. Globally, hyperscalers are ramping up investments in AI-focused data centres, creating strong demand for optical fibre cables, interconnect solutions and telecom infrastructure. As AI workloads become increasingly complex and compute-intensive, the need for faster and denser connectivity within and between data centres continues to grow, directly benefiting companies such as Sterlite Technologies.

India's own data centre opportunity is adding further momentum. A KPMG report projects the country's data centre industry revenue to reach nearly $45.69 billion by 2033, driven by rising AI workloads, rapid cloud adoption and data localisation requirements. "With one billion internet users and businesses rapidly adopting cloud services, building domestic data centres is now a necessity," the report noted.

Can you still join the party?

Despite the extraordinary rally, some brokerages believe Sterlite Technologies may still have room to run. Hong Kong-based CLSA estimates the stock could gain another 13% (target of Rs 655) from current levels. The optimism follows a major $1 billion order win from a U.S. hyperscaler, which analysts believe materially strengthens the company's position in the AI data centre ecosystem while improving visibility on medium-term growth.

CLSA expects the order to reinforce Sterlite's competitiveness in international markets and is now modelling a 49% EBITDA CAGR between FY26 and FY29. The brokerage continues to maintain an "Outperform" rating on the stock.

Valuations a concern?

"While valuations look stretched, with STL trading at relatively higher valuations, there are still some structural gains for the next 3-5 years, provided a healthy correction comes first," said Ravi Singh of Master Capital Services.

Santosh Meena, Head of Research at Swastika Investmart, echoed a similar view. "Valuations look stretched. STL trades at premium multiples (often 300x+ TTM P/E due to recent profitability) with limited margin of safety. There is room for further upside if order execution delivers strong 15-25%+ CAGR and margin expansion, but high valuations leave little room for disappointment on delays or slowdowns in AI/telecom capex," he said.

Balaji Rao Mudili, Research Analyst at Bonanza, said Sterlite Technologies has taken a sharper strategic bet on AI data centre connectivity through its Neuralis portfolio, which includes ultra-high-density pre-terminated fibre trunks, MPO assemblies and high-speed interconnect cables supporting up to 6,912 fibres.

According to Mudili, the company's vertically integrated model spanning optical fibre manufacturing to finished connectivity products aligns well with what hyperscalers increasingly seek from a single supplier. With North American data centre capacity projected to nearly double to 114GW by 2030 and India's data centre market expected to grow five-fold to 8GW, Sterlite appears well positioned to capitalise on the opportunity. For investors looking to play the data centre and optical fibre theme, he believes Sterlite Technologies remains a preferred pick.

Despite the strong growth narrative, analysts caution that the stock now firmly belongs in the high-risk, high-reward category. Whether the exceptional gains can be sustained will largely depend on future order wins, execution capabilities and the company's ability to convert the AI and data centre opportunity into long-term earnings growth.

Should you enter now?

Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, told ETMarkets that the stock has already undergone a healthy correction of around 14% after touching a high of Rs 680 on June 5.

According to Shah, the Rs 530-525 zone remains a crucial support area. As long as the stock holds above this range, the broader bullish structure remains intact and the stock is likely to resume its upward trajectory over the medium term.

In many ways, Sterlite Technologies has emerged as India's purest listed play on the AI connectivity theme. Whether the momentum can sustain from here remains to be seen, but for now, the market is betting that the data centre and AI infrastructure boom is still in its early innings.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)