AI Stocks: Best Artificial Intelligence Stocks in India

The first month of the year 2024 saw India’s first artificial intelligence unicorn taking shape when Krutrim raised $50 million at a valuation of $1 billion. Krutim was launched on December 15, 2023. This shows the rapid rise of the AI industry in India and how well the country is poised to put its stamp on the technology that has taken the world by storm. 

Various reports peg India’s AI market size at less than $1 billion currently, and set to grow at a CAGR of 25-35% to $4 billion by 2029. What is even more promising is the potential of Indian companies to tap into the global market. PricewaterhouseCoopers projects AI to contribute up to $15.7 trillion to the global economy in 2030.  

What are AI Stocks? 

Many listed Indian technology companies have realised the potential AI offers. They have either opened new divisions within their own company or have tied up with global players for a pie of the AI market. Also, one can expect many of the start-ups to soon list on exchanges to raise funds for themselves for their investors. 

AI stocks invest their resources in developing the AI technology itself or its use cases in various fields. 

How to Invest in Artificial Intelligence (AI) Stocks in India?

Here's how to buy AI stocks on the Indian NSE:

1. Create a brokerage, trading, or demat account. With 5 Paisa, you may start a demat account!

2. Research Indian artificial intelligence stocks thoroughly if you have any interest in them. To do this, investors can make use of resources publically available and affiliated by SEBI such as genuine Stocks Screener. 

3. Put in a "Buy" order for the AI stocks that you like.

Top 10 AI Stocks to Invest in India

Overview of the Best AI Stocks to Invest in India

Tata Consultancy Services or TCS:  

Tata Consultancy Services Ltd or TCS, founded in 1968 is a global leader in IT services, consulting and business solutions. Part of the Tata Group, TCS is known for its innovations in digital, cloud and AI. As of 18 September It has a market capitalization of ₹15,72,475 crore, with a stock price of ₹4,346. The company has a PE ratio of 33, a dividend yield of 1.24% and an impressive return on equity of 51.5%.

Infosys:

Infosys Ltd founded in 1981 by Narayana Murthy, is a global leader in IT services and consulting. It offers software development, maintenance and validation services to industries like finance, insurance and manufacturing. Infosys is known for its focus on innovation, digital transformation and AI. As of 18 September Infosys has a market capitalization of ₹7,85,691 crore and a share price of ₹1,892, the company has a PE ratio of 29.5, a dividend yield of 2.01%, and a return on equity of 31.8%.

Wipro:  

Wipro is a leading technology services and consulting company. It has two main areas of focus, IT Services and IT Products. IT Services segment provides a wide range of services such as digital strategy, technology consulting and customer focused design. IT Products segment supplies various third party IT products like computing platforms, storage, networking solutions and software, supporting its system integration services. Wipro’s services include Artificial Intelligence, Cloud Solutions, Data & Analytics, Digital Experiences and Sustainability.

As of 18 September 2024 Wipro has a market capitalization of ₹2,81,097 crore and a share price of ₹537, the company has a PE ratio of 25.2,  dividend yield of 0.19% and a return on equity of 14.3%.
 

HCL Technologies:  

HCL Technologies founded by Shiv Nadar in 1976 is one of India’s top global IT services companies. It specializes in IT consulting, software development and business process outsourcing, serving sectors like technology, finance, manufacturing and healthcare. The company offers solutions in digital, cloud, automation, cybersecurity and analytics. As of 18 September 2024, HCL Technologies has a market capitalization of ₹4,76,701 crore and a stock price of ₹1,756. It has a PE ratio of 29,  dividend yield of 2.96% and a return on equity of 23.3%.

Tata Elxsi:

Tata Elxsi founded in 1989 is a global design and technology services company that works with industries like automotive, broadcast, communications and healthcare. It offers product engineering, design and technology solutions.  As of 18 September 2024 the company has a market value of ₹47,575 crore with its stock priced at ₹7,642. Tata Elxsi has a P/E ratio of 60.4, dividend yield of 0.92% and a return on equity of 34.5%.

Tech Mahindra:  

Tech Mahindra founded in 1986 and part of the Mahindra Group, offers IT and outsourcing services to industries like telecom, manufacturing, finance, healthcare and retail. It focuses on digital transformation, data analytics, and cloud services. As of 18 September 2024 the company has a market capitalization of ₹1,57,042 crore with a share price of ₹1,605. Its PE ratio is 62.4, dividend yield is 2.49% and return on equity is 8.63%.

Kellton Tech Solutions:  

The company has shifted most of its focus on AI offering generative as well as conversational AI based solutions. It has also launched Kverse Customer Experience Center and Innovation Lab in Gurgaon with a focus on AI. 

The company has low debt and has seen increasing FPI investment. The stock recently witnessed highest recovery from a 52 week low. As of 18 September 2024 the company has a market capitalization of ₹1,366 crore with a share price of ₹140. Its PE ratio is 19.9 and return on equity is 15.7%.
 

Saksoft:

Another company that has moved its focus to AI, Saksoft offers AI based end to end services encompass AI consulting, data mining, ML development, computer vision and NLP powered aspect based sentiment analysis.  As of 18 September 2024 the company has a market capitalization of ₹3,792 crore with a share price of ₹357. Its PE ratio is 39.2 and return on equity is 21.1%.

Subex:

The company has focused on AI solutions for telecom companies apart from other sectors.  It leverages AI to help telcos forecast network growth traffic, users and utilization. It also offers machine learning and deep learning algorithms like LSTM, generative adversarial networks, capsule network, elastic net, etc to detect and prevent fraud in network. As of 18 September 2024 the company has a market capitalization of ₹1,580 crore with a share price of ₹28. Its return on equity is -12.2%.

Happiest Minds Technologies:

The company is offering solutions that combines augmented intelligence with natural language processing, image analytics, video analytics and emerging technologies like AR and VR. As of 18 September 2024 the company has a market capitalization of ₹12,123 crore with a share price of ₹796. Its return on equity is 21.3% and P/E ratio is 52.5 

Overview of the AI Industry

The Indian AI industry mostly comprises of start-ups and incumbent technology companies that have started delving into the field. The government is also doing its bit to leverage the technology. The Ministry of Electronics and IT has sought an outlay of Rs 10,000 crore for India AI plan, including setting up servers on PPP mode.

According to a 2023 survey by PwC around 54% of companies have implemented AI for business. This gathered further momentum post COVID as companies started using AI tools to smoothen their workflow. 

A joint study conducted by Microsoft and the Internet and Mobile Association of India (IAMAI) showed India produces 16% of the world’s AI talent pool and Indian AI market is expected to witness a growth of 20% over the next five years.

Most of these companies are already technology leaders in India and abroad and have now started using AI for innovative solutions for their customers. While few of them are pure play AI companies, most joint hands with others or opened own verticals for AI-based solutions.

Features of Artificial Stocks in India 

AI stocks in India have unique features that make them stand out in the financial market:

1. Algorithmic Trading: These stocks use advanced algorithms to execute trades quickly and accurately, relying on real time market data.

2. Predictive Analytics: AI companies utilize data driven models to predict market trends and fluctuations, helping investors make informed decisions.

3. Risk Management: AI stocks come with strong risk management tools that adjust to minimize potential losses and optimize returns.

4. Market Adaptability: Machine learning algorithms continuously learn and adapt to changing market conditions, refining strategies to stay effective.

5. Automated Portfolio Management: AI stocks often include automated tools for managing and diversifying portfolios, making the investment process more efficient.

These features help AI stocks perform well in a dynamic market, offering both precision and flexibility.

Benefits of Investing in Artificial Intelligence (AI) Stocks in India 

Investing in best artificial intelligence stocks in India has several advantages:

1. AI industry is growing rapidly, with a market expected to reach USD 267 billion by 2027. As AI transforms fields like healthcare, finance and retail leading AI companies are likely to see significant growth.

2. AI stocks offer the potential for high returns. Even though the AI sector is still developing, its expanding products and services can drive up stock prices.

3. Investing in AI stocks allows you to spread your investments across various industries since AI is used in many sectors. This diversification can help lower risk and add stability to your investment portfolio.

Risks of Investing in AI Stocks

Let's examine the difficulties that investors in the best AI stocks in India should keep in mind:

1. Volatility: Investing in even the top AI stocks in India carries some risk over the long run, just like any other investment. The stock market's volatility is one of the primary hazards. The prices of AI stocks in India that are available for purchase are subject to sudden swings in the market.

2. Intense Competition: There is intense competition in the AI sector. Largely resourced, well-established businesses have the ability to join a market fast, upend established rivals, and result in substantial losses for investors. Therefore, before making an investment in the best AI penny stocks in India, investors should do extensive research.

3. Developments in Technology: Additional hazards encompass modifications in regulations, rivalry, and technological constraints. The AI sector may be impacted by changes in regulations, and stockholder profits of AI companies may decline due to competition. The development of the AI sector may also be impacted by technological constraints.

Tips for Investing in AI Stocks

Here are some tips for investing in artificial intelligence (AI) stocks in India:

1. Spread your investments across different AI companies to reduce risk. Research each company thoroughly before investing.

2. AI stocks can be volatile in the short term, so it's important to invest with a long term perspective.

3. Keep up with the latest industry news and developments. Avoid making investment decisions based on emotions or incomplete information. Watch out for new technologies that might impact the AI industry.
 

Factors to Consider Before Investing in Best AI Stocks in India

AI stocks offer promising opportunity to investors due to the massive size the market is expected to command in the future. But like any other investment, a person should consider various factors before putting in the money. Here are some of those factors:

Financials: Check the fundamentals of the AI company that you plan to invest in carefully. The company’s balance sheet and cash flow statement need careful analysis as AI is costly. Companies will need deep pockets to invest in AI research. 

Client diversity: A company must have clients that are willing to spend on AI-based solutions. This would help the company spend on building AI workforce. 

Technical: If the valuation of an AI company is already very high, then one should be careful about investing in it. One should also look at other factors such as moving averages, support and resistance for each stock before investment decision. 

Partnerships: A partner that has already aced AI would always be helpful for any Indian company that wants to dabble in the sector. Even collaborations with research institutes and universities will be helpful. 

M&A capabilities: Many Indian listed companies are eyeing smaller AI startups in India and abroad for acquisition. A company with good amount of dry powder or funds to buy these startups will have an upper hand in the market. 
Segments of the AI Stocks

AI in itself is maze of many segments based on the focus or application. These segments represent different areas in which companies specialize in providing AI solutions and services. Here are some key segments of AI stocks:

Machine Learning or ML: Companies in this segment focus on solutions that help a machine learn on its own through deep learning algorithms. Such companies provide AI solutions for data analysis, predictive analytics, natural language processing, image recognition, and many other developing fields.

Natural Language Processing or NLP: This is one of the fastest growing us of AI. NLP companies specialise in language-related AI applications such as chatbots, voice assistants, and language translation. Such companies improve human-computer interactions through voice-to-text understanding.

AI Hardware: AI needs very high speed equipment. This segment includes companies that make AI-such components including Graphics Processing Units, Tensor Processing Units, and AI-enhanced chips. 

AI Platforms: Such companies offer AI software and platforms that enable businesses to build and deploy AI applications of their own.

Robotics: This segment that involves developing and deploying robots incorporating AI technologies. Such robots can be used in manufacturing, healthcare, and other industries to improve efficiency.

Internet of Things or IoT: This segment of the AI industry involves connected devices that can collect and exchange data. AI is used to analyze this data and provide insights that can improve products and services.

Also check: 5 Best Artificial Intelligence Stocks in India 2024

Why invest in AI stocks?

AI stocks offers the opportunity to capitalize on the transformative power of a technology that is set to reshape industries and drive innovation across various sectors. The global market for AI is projected at US $2.6 trillion by 2032 by Precedence Research.

Check Webstory on 5 Best AI Stocks With High-Volume Trades For May 2024

Conclusion

AI stocks represent companies that are leading the development of cutting-edge AI solutions, from machine learning to robotics to healthcare diagnostics and every other field. AI is set to revolutionise business processes and decision-making  leading to changes that are as deep as the advent of computer or Internet itself. It is important for investors to key in on the drivers of this change and invest early.