The artificial intelligence boom is no longer the exclusive domain of global technology giants. In India, it has created an unlikely set of stock market winners: optical fibre manufacturers.
No company has captured investor attention quite like Vedanta-backed (0.98% stake)
. The stock soared an astonishing 400% in 2026, making it one of the market's standout performers. The rally has also fuelled a dramatic wealth creation story, with the company's market capitalisation ballooning from just over Rs 4,000 crore at the start of the year to around Rs 27,000 crore in just six months.
But the spectacular run has hit a speed bump. Shares have fallen around 27% over the past month from their June record high of Rs 684, raising a key question for investors. Should those sitting on massive gains book profits, or does the recent correction offer an opportunity for those looking to enter the stock? Here's what analysts are saying.
Sterlite Tech consolidation ahead?
Following a gain of more than 400% over a relatively short period, the recent correction of nearly 25% towards the Rs 500 level should be seen as a normal pause in the broader bullish trend rather than a sign of structural weakness, according to Sachin Gupta, VP, Technical Research at Choice Equity Broking.
The correction has also helped ease excessive momentum, with the 14-day Relative Strength Index (RSI) falling from extremely overbought levels above 90 to around 42, pointing to a healthier technical setup. Gupta said the Rs 440-Rs 460 range has emerged as a key support zone and could attract buying interest, keeping the long-term uptrend intact as long as the range holds. On the upside, the Rs 550-Rs 560 zone remains the first major hurdle. A decisive breakout above this resistance, backed by strong volumes, could mark the end of the consolidation phase and open the way for a fresh rally towards Rs 630, followed by a possible retest of the lifetime high near Rs 680.
Virat Jagad, Senior Technical Research Analyst at Bonanza, said
Technologies has corrected nearly 25% over the past month following an exceptional 390% rally in 2026, pointing to healthy profit booking after a sharp uptrend. However, the stock remains under technical pressure as it trades below its 20-day and 50-day EMAs, while an RSI near 40 indicates weak momentum without reaching deeply oversold levels.
The immediate support is placed around Rs 490-Rs 500, with a decisive break below this zone potentially triggering further downside towards Rs 460. On the upside, Rs 540-Rs 550 is the first resistance zone. Jagad advised investors to avoid aggressive buying until the stock sustains a move above its short-term moving averages, while existing holders should maintain strict stop-loss levels.
CLSA sees further upside
From a fundamental perspective, Hong Kong-based CLSA sees further upside of 24%, with a target price of Rs 655. The brokerage's optimism follows a major $1 billion order win from a U.S. hyperscaler, which it believes significantly strengthens Sterlite Technologies' position in the AI data centre ecosystem and improves visibility on medium-term growth.
CLSA expects the order to further strengthen Sterlite Technologies' competitiveness in international markets and is now modelling a 49% EBITDA CAGR between FY26 and FY29. The brokerage has retained its 'Outperform' rating on the stock.
Behind Sterlite Tech’s share price rally
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.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)