AI boom may benefit power, metals more than IT, says Manulife’s Rana Gupta

The biggest beneficiaries of the artificial intelligence (AI) boom may not be software exporters at all, but the companies building the physical backbone that allows AI to function. Rana Gupta, Senior Portfolio Manager at Manulife Investment Management, believes investors are focusing too narrowly on IT services when the real opportunity sits in the infrastructure supporting data centres and hyperscaler expansion.He pointed out that global technology firms are committing hundreds of billions of dollars to capital expenditure to win the AI race, and that spending inevitably flows into electricity, equipment and materials before reaching software vendors.

“They need power… and in power systems and in metals there are significant players.”
As hyperscalers scale up capacity, demand rises for switchgear, backup generators, cables and cooling systems — all essential to running data centres. Gupta said these ancillary industries could see sustained earnings visibility because AI workloads are extremely energy-intensive and require continuous uptime and temperature control.

India may not manufacture semiconductors or memory at scale, but it has meaningful exposure to electrical equipment and engineering supply chains. He sees opportunities particularly in power equipment, generators and heating, ventilation, and air conditioning (HVAC) systems as data centre construction accelerates. The implication is that the AI cycle will resemble an industrial investment cycle as much as a technology one.

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The shift also reframes how investors should think about IT services. Rather than the sole beneficiaries of global digital spending, technology companies become only one layer in a broader ecosystem, while the infrastructure providers capture steady, multi-year order flows tied directly to capital spending.
Beyond the AI theme, Gupta remains constructive on the domestic economy as well. Corporate earnings have begun to improve alongside credit growth, with BSE-500 profits rising roughly 11–12%, indicating strengthening nominal activity. Within financials, he prefers lenders exposed to small businesses.

“Within the credit growth area, we are most bullish on the SME credit.”

He also sees early signs of a revival in private-sector investment after a prolonged pause, with companies indicating fresh spending in data centres, real estate and metals, alongside rising government defence outlays.

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“For the first time, after one and a half years, the companies in the earnings calls have made some constructive noises about the capex.”

That revival is feeding into transport demand as well. As construction and infrastructure activity pick up, commercial vehicle volumes are improving after two years of weakness, supporting both manufacturers and financiers.

“After two years of lull, we see commercial vehicle…there is a good runway ahead.”

For the entire interview, watch the accompanying video

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