While much of the global conversation around AI revolves around its impact on IT and how India still trails markets such as South Korea and Taiwan in direct exposure to AI and semiconductors, the country's rapidly expanding data centre industry is quietly creating opportunities in a less-discussed corner of the market.Investors have already started pricing in that opportunity and HFCL, a manufacturer of optical fibre cables, has emerged as one of the biggest winners, with the stock rallying nearly 200% in just six months.This comes as India's data centre industry is entering a multi-year growth cycle, supported by accelerating digitalisation, increasing cloud adoption and rising demand for artificial intelligence infrastructure.According to international brokerage Nomura, India's data centre IT load has expanded from around 350 MW in 2019 to nearly 1.5-1.6 GW in 2025, translating into a CAGR of about 29%, compared with roughly 20% globally.HFCL’s AI-led boom explainedFor HFCL, the March quarter marked a sharp turnaround in performance. Revenue nearly doubled year-on-year to Rs 1,824 crore, EBITDA swung from negative territory to Rs 315 crore and profit after tax moved from a loss of Rs 83 crore to a profit of Rs 184 crore within a year."The structural shift is real. Product revenue has grown from 27% of the mix in FY21 to 59% in FY26, and exports now account for 41% of revenue. That's a business fundamentally changing its character," said Balaji Rao, Research Analyst at Bonanza.Its FY26 consolidated revenue nearly doubled year-on-year to a record Rs 4,949 crore, while EBITDA stood at around Rs 827 crore and profit after tax came in at approximately Rs 329 crore.Growth prospects have been further strengthened by a major international contract worth around Rs 10,159 crore, one of the largest orders in the company's history for the supply of optical fibre cables.The deal is expected to deepen HFCL's presence in the global optical fibre cable market, where demand continues to rise on the back of expanding 5G networks, data centres and digital infrastructure projects worldwide.Can you buy HFCL shares after stellar rally?Monarch Networth Capital believes HFCL is witnessing a high-quality earnings turnaround, supported by stronger capacity utilisation and a richer product mix.Business visibility also remains strong. HFCL's order book has reached an all-time high of around Rs 21,200 crore. Management has guided for revenue growth of 20-25% in FY27 along with a 3-4 percentage point expansion in EBITDA margins. It has also articulated a long-term aspiration of achieving Rs 10,000 crore in revenue.Monarch further highlighted the optionality emerging from HFCL's expansion into defence, aerospace and data-centre-related opportunities. The company is scaling up its defence and aerospace vertical, supported by a 1,000-acre facility allotted in Andhra Pradesh, a defence manufacturing unit in Hosur and a proposed aerospace acquisition carrying an export order book of around Rs 1,930 crore.At the same time, subsidiary HTL is expanding its data-centre interconnect solutions business to capitalise on rising investments in AI and data-centre infrastructure globally. According to the brokerage, HFCL could be poised for a re-rating if it delivers on its growth and margin targets. Management's FY27 guidance, combined with tailwinds from 5G rollouts, BharatNet, AI and data-centre-driven fibre demand, as well as India's defence indigenisation drive, provides a credible pathway for medium-term growth.Monarch also noted that HFCL is India's largest optical fibre cable manufacturer, with manufacturing facilities across the country. It added that HFCL was the first Indian company to develop and commercialise 5G Fixed Wireless Access customer-premises equipment.The brokerage pointed out that HFCL has rapidly transformed from a predominantly domestic, optical fibre cable-focused company into a globally diversified technology player. Export revenue has increased from around 11% of sales in FY24 to nearly 41% in FY26, while management is targeting exports to account for more than 50% of revenue by FY27, supported by a confirmed export order book of over Rs 12,000 crore.Geojit also sees a meaningful opportunity emerging from HFCL's defence business. The domestic brokerage said the company's foray into the defence vertical offers medium-term revenue visibility, with electronic fuses nearing commercialisation and a diversified product portfolio targeting revenue of Rs 400-500 crore in FY27, scaling to over Rs 1,000 crore by FY28.Valuations a concern?Despite the strong business momentum, valuations remain a key debate. Experts believe that HFCL offers a more diversified play compared with Sterlite Tech and has structural growth drivers in place for the next three to five years, provided it witnesses a healthy correction first.HFCL currently trades at a trailing P/E multiple of above 70x. While that appears relatively more comfortable than Sterlite Tech, it remains significantly above historical averages.Analysts believe the stock now firmly sits in the high-risk, high-reward category. The sustainability of the rally will ultimately depend on future order inflows, execution capabilities and the company's ability to convert the AI and data-centre boom into durable earnings growth.HFCL has emerged as one of India's purest listed plays on the AI connectivity theme. Whether the momentum sustains from here remains to be seen, but for now, the market appears to be betting that the AI and data-centre infrastructure story is still in its early stages.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)