The AI wave is reshaping IT services, product engineering, embedded software and domain-specific enterprise platforms — and several Indian-listed companies are positioned to benefit. Below I shortlist five India-centric names that combine credible AI strategy, healthy fundamentals, and constructive technicals going into 2026, explain why, flag risks, and give a simple portfolio allocation idea.
1) Tata Elxsi — niche leader in embedded & automotive AI
Why fundamentals: Tata Elxsi is a focused product-engineering and design player for automotive, healthcare and media — areas where embedded AI and vision systems matter. It has strong return-on-equity metrics and healthy margins for its space (ROE ~29% reported in Mar 2025). Smart Investing
Why technicals: Multiple technical-data pages and moving-average trackers show Tata Elxsi in a medium-to-long-term uptrend (price often holding above key SMAs on weekly/monthly frames), making it a favored technical play among growth/tech traders. Investing.com+1
Takeaway: A specialised AI/embedded play — higher beta but with strong profitability metrics.
2) Infosys — scale, AI platforms and cash generation
Why fundamentals: Infosys has publicly positioned itself around AI/cloud/data (e.g., “Topaz” and enterprise AI offerings) and continues to report high operating margins and very strong free-cash-flow generation (FY24–25 reporting highlights AI as a strategic priority). The size, recurring revenues and cash generation provide balance and defensive qualities. Infosys
Why technicals: As a large-cap, Infosys often exhibits stable technical structure — price action typically reflects institutional flows around earnings and product-cycle wins. (Check current MA/Rsi signals before trading.) Infosys
Takeaway: The “big-cap” AI play — lower volatility vs small-cap specialists, with solid balance sheet and enterprise reach.
3) Persistent Systems — product engineering + MLOps/Digital platforms
Why fundamentals: Persistent has grown into a multi-billion-dollar engineering player focused on product modernisation and platform-led services (they published FY25 reports showing steady revenue and margin discipline and highlighted MLOps/data-platform capabilities). That operational track record and improving scale matter for AI engagements. Persistent Systems+1
Why technicals: Persistent’s share-price momentum historically follows its earnings and contract wins; recent presentations show sustained sequential revenue growth and margin improvement — positive for technical momentum into 2026. Persistent Systems
Takeaway: Mid-cap engineering & platform play on enterprise AI adoption and product modernization.
4) Tech Mahindra — telecom & industry-focused AI solutions
Why fundamentals: Tech Mahindra has explicitly rolled out an “AI Delivered Right” strategy and is winning AI/automation work across telco, manufacturing and BFSI verticals; recent quarter-level revenues and new bookings reflect that operational traction. Scale in telecom and partnerships with hyperscalers give it practical pathways for AI-driven services. Tech Mahindra+1
Why technicals: News-driven catalysts (large contracts, earnings beats/misses) have been moving the price; positive revenue beats and improved bookings can translate into favorable technical momentum. Reuters
Takeaway: A sector-specific AI play — good if you want exposure to telco/communications automation and incumbent scale.
5) Mphasis — domain-focused AI in BFSI & platforms
Why fundamentals: Mphasis positions itself as an enterprise transformation and platform player with verticalised AI/automation offerings (Front2Back™ and domain platforms). Several fundamental trackers and analyst commentary list Mphasis as having strong fundamentals for long-term investment as of Oct 2025. Smart Investing
Why technicals: Market perception of domain-specialist wins (BFSI automation contracts, platform rollouts) tends to move the stock; technical momentum often gets positive lifts after deal announcements.
Takeaway: Good for investors who prefer domain-specialist AI plays (BFSI automation & platformisation).
Portfolio ideas (simple templates)
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Conservative (long-term, lower risk): 50% Infosys, 20% Tata Elxsi, 15% Persistent, 10% Tech Mahindra, 5% Mphasis.
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Balanced (growth + stability): 35% Infosys, 25% Tata Elxsi, 20% Persistent, 10% Tech Mahindra, 10% Mphasis.
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Aggressive (higher growth tilt): 20% Infosys, 35% Tata Elxsi, 25% Persistent, 10% Mphasis, 10% Tech Mahindra.
Adjust weights for your risk tolerance, holding horizon and diversification needs.
Key risks to keep in mind
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Macro & IT spending cycles: Enterprise IT/AI budgets can be cyclical — a global slowdown hits discretionary AI projects.
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Execution risk: AI projects often require integration and domain expertise; vendors that fail to deliver ROI risk client churn.
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Valuation & sentiment: High-growth AI narratives can already be priced in; small missteps can trigger large drawdowns.
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Regulatory & talent: Data governance, export controls, and talent constraints (cloud/hyperscaler dependence) can affect margins and execution.
Final thought
AI exposure in India can mean different things: embedded AI (Tata Elxsi), enterprise platforms and services (Infosys, Persistent), or industry-specific automation (Mphasis, Tech Mahindra). Combining a fundamental screen (profitability, cash flow, ROE, bookings) with a technical check (trend + momentum) helps separate durable winners from short-lived hype as we head into 2026.