Shankar Sharma: Small-Caps Fuel India’s AI & Data Growth
Small-cap stock charts ascend over data center components and AI network infrastructure.
Key Highlights
Investor Shankar Sharma highlights small- and mid-cap stocks as key growth drivers, especially in AI and data centers, outperforming stagnant large caps.
Ace investor Shankar Sharma emphatically states that India’s small- and mid-cap stocks are poised to capture significant growth opportunities. This potential, he argues, stems largely from global advancements in artificial intelligence (AI) and the expanding data center infrastructure, a stark contrast to large-cap stocks that currently lack fresh market catalysts.
Sharma, founder of Gquant FinxRay, recently revealed in an interview that beneath a seemingly calm market surface, substantial momentum is building. He highlighted the apparent stagnation of the , while noting that smaller indices have seen nearly half their constituents replaced by new, growth-oriented enterprises.
AI and Data Center Catalyst
His investment focus remains firmly on the AI and data-center ecosystem, anticipating the global AI trade will continue its expansion. Indian companies, Sharma believes, are particularly well-placed to benefit from this extensive infrastructure spending.
The data-center boom, as explained by Sharma, is creating significant demand for what he terms “infrastructure tech” businesses. These are key suppliers essential for the ongoing expansion and technological upgrade:
- Cables
- Optical fiber
- Electrical equipment
Long-Term View, Growth Over Valuation
Sharma characterizes the data-center expansion as a long-term phenomenon, necessitating continuous capital expenditure for both technological upgrades and increased processing capacity. Consequently, he has strategically increased his exposure to small-cap investments, identifying them as a preferred segment.
While acknowledging short-term risks associated with valuations and inventory gains, Sharma sees superior potential in growth-oriented small caps. He advises investors against equating low large-cap valuations with genuine growth, asserting that true earnings momentum is increasingly concentrated within the broader market.