India's AI Ambitions Shift Focus to Infrastructure, Boosting GPU Demand

India’s Artificial Intelligence (AI) ambitions are moving beyond software and into infrastructure . As AI models become larger and more compute-intensive, the focus is shifting to the hardware and cloud capacity needed to build and run them. India is also building its own AI ecosystem. Through the IndiaAI Mission , the government has approved the deployment of 38,000+ GPUs to create a shared AI compute infrastructure, reducing dependence on overseas capacity while supporting startups, researchers, and enterprises developing indigenous AI models . This push is being backed by a rapid expansion in digital infrastructure. India’s data centre pipeline has reached 8.33 gigawatt (GW). At the same time, the AI infrastructure market is projected to grow from ₹11,540 crore in FY26 to ₹28,290 crore by FY30. As demand for GPU computing and AI cloud services rises, these two leading companies are positioning themselves to benefit from India’s growing AI infrastructure buildout. E2E Networks is India’s sovereign provider of advanced cloud GPUs, delivering full-stack AI and cloud infrastructure. The company caters to enterprises, startups, and government initiatives such as powering models for the IndiaAI Mission . To capture the growing demand, E2E has scaled its fleet from 1,900 Graphics Processing Unit (GPUs) to 3,900 in FY26 and 5,100 in Q1FY27. Management expects further capacity scaling in the coming months with over 1,024 additional NVIDIA B200 GPUs planned. This new GPU capacity could drive revenue growth as they reach maximum utilisation. E2E management states that utilisation will reach maximum levels almost immediately upon going live. For instance, the 1,024 NVIDIA GPUs which went live in mid-May 2026 immediately reached peak utilisation. As GPU infrastructure expands, fixed platform and infrastructure costs scale at a much lower rate, driving strong operating leverage. This increases margins, as is evident from Q1FY27 earnings. The company’s Q1FY27 EBITDA surged by 1022.8% year-over-year to ₹117.9 crore while margins expanded by 4,610 bps to 75.2%. Not only margins but revenues also increased significantly. Operating revenues grew 334.3% year-over-year and 64% quarter-over-quarter to ₹156.8 crore. Depreciation and amortization expenses increased 121.2% to ₹60.6 crore, reflecting increased capacity. That said, E2E turned profitable (₹43.9 crore) in Q1FY27 compared to a ₹2.8 crore loss in Q1FY26. The company is strategically planning for next-generation architectures such as NVIDIA B300 and Vera Rubin. It is also broadening its presence through strategic alliances such as its data center and compute partnership with L&T and expanding sales across international markets. In Q1FY27, international clients contributed 37% to revenue and the IndiaAI Mission (21%). Domestic enterprise clients contributed the remaining amount. As there is a shortage of compute capacity amid surging prices, customers are seeking 1-, 2-, and 3-year contracts to secure GPU capacity and lock in pricing. Management believes that this shift toward longer customer commitments improves revenue predictability. Clients have also paid upfront advances to lock in service pricing. The exit monthly revenue run-rate (MRR) shows increasing revenue visibility. MRR has increased to ₹71.8 crore in June 2026, almost doubling from ₹37.4 crore in March 2026. Over four years, this has increased by 14.1x from ₹5.1 crore in June 2022. Increasing share of long-term contracts augurs well for the company’s revenue visibility and stability. Netweb Technologies is one of India’s leading Original Equipment Manufacturers (OEM) in the space of High-end Computing Solutions (HCS). The company operates its primary manufacturing facility in Faridabad, Haryana. Netweb has manufacturing partnerships with NVIDIA and AMD. It offers a fully integrated model, spanning in-house technology design, hardware development, software stack creation, system manufacturing, and large-scale deployment. Netweb’s business is structured across six primary product and solution verticals within the HCS domain. AI systems (62.3% of Q1FY27 revenue) are the primary growth engine. The segment focuses on every layer of the AI stack, including AI compute architectures, advanced power distribution, direct liquid cooling, GPU orchestration, and AI workspace management software. Private cloud and hyperconverged infrastructure (16.5%), supercomputing (15.3%), enterprise storage (3.6%), software and services for HCS (0.9%), and data center servers (1.4%) contribute the remaining revenue. Netweb reported a strong Q1FY27 financial performance. Netweb’s revenue increased 172.1% year-over-year to ₹819.7 crore, driven by the completion of its order book. Revenue from repeat customers accounted for 98.9% in Q1 FY27, showing high customer stickiness. Operating EBITDA increased 169% to ₹120.5 crore, with margins at 14.7%. Net profit increased 180% to ₹85.3 crore. As of June 30, 2026, the order book of ₹2,506.9 crore provides revenue visibility over a year based on FY26 revenue of ₹2,184 crore. Additionally, Netweb is the L1 bidder for orders worth ₹848.5 crore. The active order pipeline is ₹1,041 crore. Management expects to maintain a historical pipeline conversion rate of approximately 60%. Further, active pipeline opportunities typically convert to confirmed orders within 18 to 24 months. Currently, the delivery and deployment timeline is between 16 to 20 weeks. Netweb’s capacity can already handle revenues exceeding ₹3,000 crore. Netweb’s growth is linked to a strategic AI push and government policy to expand domestic GPU compute infrastructure, build foundational LLM models, and create sovereign data platforms. A key sectoral tailwind is the government mandate to design and develop indigenous hardware and domestic manufacturing for large government compute tenders. Netweb qualifies under the government’s Production Linked Incentive (PLI) scheme for IT hardware, telecom and networking. Domestic manufacturing capabilities position Netweb to fulfill government and defence projects. Additionally, the management expects to benefit from compute expansion by global players setting up data centers in India. Netweb is a capital-light business, as evidenced by its strong return on capital employed (RoCE) and return on equity (RoE). E2E is currently in investment mode, as evidenced by higher depreciation costs, which have compressed its profitability and return ratios. From a valuation perspective, both companies are trading at a premium EV/EBITDA multiple to the industry. However, relative to their own three-year historical median, E2E is trading at a slight premium and Netweb at a discount. India’s AI opportunity is increasingly becoming an infrastructure story. While E2E is building GPU cloud capacity to meet rising demand for AI compute, Netweb is enabling the ecosystem through domestically manufactured AI servers and high-performance computing systems. Both companies are aligned with India’s push for sovereign AI infrastructure under the IndiaAI Mission. But they represent different parts of the value chain. Their execution, capacity expansion, and ability to convert demand into sustainable earnings will determine whether they can justify their premium valuations. It’s worth adding them to your watchlist to keep them on your radar. Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were not available have we used an alternate, widely used, and accepted source of information. 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