The pivot accelerated final week when Reliance included Reliance Enterprise Intelligence Restricted (REIL), a three way partnership giving Meta a 30% stake alongside Reliance Intelligence’s 70% holding. The companions have collectively dedicated an preliminary ₹855 crore to develop, market and distribute enterprise AI providers — the clearest sign but that Ambani’s AI ambitions have moved from boardroom displays to steadiness sheet actuality.
Morgan Stanley analysts now estimate Reliance will deploy $12-15 billion on AI infrastructure to construct a 1-gigawatt datacenter, underwriting roughly 25% of capability itself. “We estimate an ROCE of roughly 11% on these preliminary investments, based mostly on latest token costs from LLM suppliers,” mentioned Mayank Maheshwari at Morgan Stanley, including that the agency expects remaining capability may very well be leased as “Datacenter as a Service” to hyperscalers and enormous language mannequin suppliers.
The valuation thesis is easy: “We consider it may very well be valued at a minimal of 2x P/B, if not greater, contemplating the valuations of world friends comparable to GDS in Asia (US gamers like CoreWeave and Equinix buying and selling at even richer multiples),” Morgan Stanley famous. At twice the $15 billion capital invested by 2027, that suggests a $30 billion valuation for the AI vertical alone.
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From Inference to Infrastructure
The technique operates on two tracks. Reliance will make the most of its preliminary 100-megawatt Gen AI datacenter capability — scaling over two years — to handle enterprise inference demand by way of its three way partnership with Meta on small language fashions, alongside partnerships with Google and Azure. Morgan Stanley estimates annual revenues of round $1.5-1.6 million per megawatt for the “Datacenter as a Service” mannequin.However the actual scale play entails Reliance underwriting greater than 20 gigawatts of inner energy demand to assist 100 gigawatts of photo voltaic panel capability and 30-40 gigawatt-hours of battery capability — turning datacenters’ voracious vitality urge for food right into a captive marketplace for Reliance’s clear vitality vertical.”We estimate that RIL will spend roughly $12-15bn on AI infrastructure to develop a 1GW datacenter, underwriting about 25% of the capability itself (roughly $7 billion for datacenter infrastructure and $5 billion for the 250MW of chips RIL will deploy straight),” Maheshwari mentioned.
Reliance’s Twin Recreation
The company construction reveals Ambani’s audacious dual-track method to AI dominance — concurrently partnering with and competing towards Silicon Valley’s greatest names. At Reliance’s latest Q2 earnings name, Anshuman Thakur, Head of Technique at Reliance Jio Infocomm, drew a pointy distinction between the telecom arm and the AI enterprise.
“Consider Reliance Intelligence as AI corporations that are popping out with merchandise and options. Reliance Intelligence shouldn’t be seeking to do its personal LLMs at this time limit however the merchandise and options, AI-based product and resolution corporations,” Thakur defined. “Jio is the person of these capabilities that are going to be constructed. Jio would additionally work with Meta and would work with OpenAI and Google and Microsoft to make use of their services as effectively.”
Then got here the telling line: “Reliance Intelligence is competing with the Metas and the Googles for the AI merchandise which can be coming into the market.”
Whereas Jio positions itself as a buyer deploying AI providers from world tech giants, Reliance Intelligence goals to construct competing AI merchandise and options — creating an uncommon dynamic the place Reliance each companions with Meta by way of a three way partnership whereas concurrently competing with Meta and Google in AI merchandise. It is a technique that requires delicate balancing: cooperating on infrastructure and foundational fashions whereas competing on enterprise functions and AI providers.
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The Jamnagar Gambit
The bodily manifestation of this pivot is taking form in Jamnagar, the place Reliance Intelligence has begun setting up gigawatt-scale, AI-ready datacenters powered by inexperienced vitality. The corporate introduced a partnership with Google Cloud to determine an AI-focused cloud area on the web site, leveraging the identical location that homes Reliance’s huge oil refining advanced.
At August’s annual common assembly, the place the phrase “AI” appeared 80 instances, Ambani framed the chance in characteristically expansive phrases: “A decade in the past, digital providers grew to become a brand new development engine for Reliance. Now, the chance earlier than us with AI is simply as giant, if not bigger. Jio promised and delivered digital in all places and for each Indian. Equally, Reliance Intelligence guarantees to ship AI in all places for each Indian.”
The Meta partnership, introduced at AGM as a 70:30 three way partnership with an preliminary $100 million dedication, goals to ship open-source AI fashions to Indian companies.
The Valuation Query
Whether or not the market assigns Reliance’s AI vertical a $30 billion valuation depends upon execution, aggressive positioning, and investor urge for food for infrastructure performs in an more and more crowded AI panorama. Morgan Stanley’s 2x price-to-book assumption displays valuations of Asian peer GDS, whereas US-based CoreWeave and Equinix commerce at even richer multiples.
The guess is essentially this: that Reliance can leverage its capital entry, vitality infrastructure, and telecom distribution to seize a significant share of India’s AI infrastructure buildout — and that the market will worth this franchise at hyperscaler multiples slightly than conventional infrastructure returns.
For Ambani, who constructed fortunes first in petrochemicals, then in retail, and most just lately in telecom by way of Jio’s disruptive entry, the AI pivot represents a fourth act. The query is whether or not synthetic intelligence will show as transformative for Reliance because the black gold that constructed the empire — or whether or not this time, the brand new oil stays liquid solely on steadiness sheets.
(Disclaimer: The suggestions, strategies, views, and opinions given by the consultants are their very own. These don’t characterize the views of The Financial Instances.)
