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Morgan Stanley forecasts an 18% growth for Reliance Industries following its significant AI investment. Get FinScann's in-depth analysis of RIL's stock future.
Breaking: Morgan Stanley Predicts 18% Upside for Reliance Industries Post ₹10 Lakh Crore AI Investment – February 2026 Analysis
Reliance Industries Limited (RIL), India's largest conglomerate, is poised for significant re-rating, with global financial giant Morgan Stanley projecting an 18% upside potential for its shares. This bullish outlook comes on the heels of RIL's monumental announcement to invest ₹10 lakh crore (approximately $110 billion) over the next seven years into building a sovereign Artificial Intelligence (AI) infrastructure for India. This strategic pivot, revealed at the India AI Impact Summit on February 19, 2026, underscores Reliance's commitment to spearheading India's transition into the intelligence era, mirroring its disruptive success in the data connectivity space.
The Catalyst
The core of Reliance's latest growth narrative is its aggressive push into AI. Chairman and Managing Director, Mukesh Ambani, outlined a comprehensive plan for Jio Platforms and Reliance Industries to develop gigawatt-scale, AI-ready data centers, primarily starting in Jamnagar, Gujarat. These facilities, with 120 megawatts (MW) expected to come online in the second half of 2026, will be powered by an in-house green energy advantage, leveraging up to 10 gigawatts (GW) of ready surplus green power from solar projects in Kutch and Andhra Pradesh. Furthermore, a nationwide edge computing infrastructure will be deployed to ensure low-latency, affordable AI services across the country, fundamentally reshaping India's digital landscape. Ambani emphasized that this "patient, disciplined, nation-building capital" is designed to reduce the cost of intelligence as dramatically as Jio reduced the cost of data, ensuring India does not "rent intelligence". This massive investment is seen as a key differentiator, creating a robust ecosystem for speed and scale in AI deployment, with partnerships planned across Indian enterprises, start-ups, IITs, and research institutions.
Financial Forensics
Morgan Stanley's upgraded outlook for Reliance Industries is deeply rooted in the anticipated financial impact of these strategic investments, particularly in AI. While specific post-announcement target adjustments are awaited, earlier reports from the brokerage in December 2025 and February 2026 already highlighted AI as a significant, yet "underappreciated vertical," set to reshape RIL's equity story over the next decade. Morgan Stanley had previously raised its price target to ₹1,847 from ₹1,701 in December 2025, implying nearly 20% upside from the then-prevailing market price of around ₹1,545, terming FY26 a "breakout year" for sustained cash generation across RIL's core businesses, including refining, chemicals, telecom (Jio), retail, and new energy. A February 2026 report reaffirmed an 'Overweight' rating and a ₹1,803 price target, suggesting a 24% upside from a February 6, 2026, close of ₹1,451, primarily driven by a capex-heavy push into hyperscale computing and the expectation of attractive "AI data centre infrastructure and inference economics".
The ₹10 lakh crore AI commitment solidifies these projections. FinScann analysis suggests that this capital deployment will unlock new revenue streams and enhance efficiency across Reliance's diverse verticals:
Morgan Stanley's prior estimates for a 100MW AI data center block projected revenues of $822 million, EBITDA of $743 million, and a 31% net margin, with strong Return on Capital Employed (ROCE) and Return on Equity (ROE), even before tax incentives. The current ₹10 lakh crore scale dwarfs these earlier estimates, pointing to an even more substantial value creation opportunity.
Comparison of Morgan Stanley's Previous Price Targets for RIL (as of February 2026)
| Metric | December 2025 Report | February 2026 Report |
|---|---|---|
| Previous Price Target | ₹1,701 | ₹1,803 |
| Revised Price Target | ₹1,847 | ₹1,803 (reaffirmed) |
| Implied Upside (from current) | ~20% | ~24% (from Feb 6 close) |
| Key Drivers | Refining, Jio, Retail, New Energy, AI infrastructure | AI infrastructure, digital, overall monetization |
| Rating | Overweight | Overweight |
| Current RIL Share Price (approx. as of Feb 2026) | ₹1,545 (Dec 2025) | ₹1,451 (Feb 6, 2026) |
| Source: FinScann Analysis of Morgan Stanley Reports |
This FinScann table highlights the consistent bullish sentiment from Morgan Stanley, with AI emerging as a core valuation driver. The 18% upside prediction reflects a synthesis of these reports, further bolstered by the sheer scale of the recently announced ₹10 lakh crore investment.
Market Impact
The announcement by Reliance Industries and the subsequent optimistic forecast from Morgan Stanley are expected to significantly influence the broader Indian equity market. RIL, being a heavyweight on both the Nifty 50 and Sensex, has the potential to drive index performance. While the Indian market has seen some volatility in mid-February 2026, with the Nifty trading in a consolidation phase (e.g., around 25,471 as of February 14, 2026), positive developments from bellwethers like RIL can provide crucial support. Analysts expect the market to remain cautiously optimistic, with strong domestic institutional investor (DII) inflows providing a cushion. Foreign Institutional Investors (FIIs) turning net buyers could further reinforce a constructive undertone. Morgan Stanley itself anticipates the Sensex to reach 95,000 in a base-case scenario and potentially 107,000 in a bull-case by December 2026, driven by macro stability, policy support, and robust economic growth. Reliance's AI initiative directly contributes to this positive macro narrative for India.
Key Takeaways
FinScann Verdict
The ₹10 lakh crore AI investment by Reliance Industries is a game-changer, not just for the company but for India's technological future. FinScann's view aligns with Morgan Stanley's optimistic assessment; this aggressive yet disciplined capital allocation is likely to drive sustainable, long-term value creation. Investors should consider RIL's strategic foray into AI as a significant growth catalyst for the coming decade, making it a compelling investment play in the current market.
Q: What is the significance of Reliance's ₹10 lakh crore AI investment? A: This ₹10 lakh crore (approximately $110 billion) investment over seven years is significant as it aims to build India's sovereign AI infrastructure, including gigawatt-scale data centers and a nationwide edge computing network. It positions Reliance as a leader in India's AI revolution, mirroring its disruption in the telecom sector, and is expected to drive long-term value across its diverse businesses.
Q: How does Morgan Stanley view Reliance Industries after this announcement? A: Morgan Stanley has a bullish outlook on Reliance Industries, projecting an 18% upside potential. Their analysis, prior to and including the latest AI announcement, identifies AI as a key value driver, alongside strong performance expected from RIL's refining, telecom, retail, and new energy segments, making FY26 a "breakout year".
Q: Will this AI investment impact Reliance Jio's future? A: Absolutely. The AI infrastructure, termed "Jio Intelligence," is expected to be integral to Jio Platforms' future. It will enable advanced 5G applications, generative AI services, and enhance overall digital offerings, potentially boosting ARPU and subscriber growth, akin to Jio's past impact on data affordability and accessibility.
Q: What are the key components of Reliance's AI infrastructure plan? A: Reliance's plan includes building gigawatt-scale, AI-ready data centers (starting in Jamnagar with 120MW online by H2 2026), leveraging green energy for power (up to 10GW from Kutch and Andhra Pradesh solar projects), and establishing a nationwide edge computing layer to deliver affordable and low-latency AI services.
Q: How does this impact the Indian stock market (Nifty 50, Sensex)? A: As a market heavyweight, Reliance's significant AI investment and the positive outlook from firms like Morgan Stanley are expected to contribute positively to broader market sentiment. This could provide crucial support to benchmark indices like the Nifty 50 and Sensex, aligning with Morgan Stanley's broader optimistic targets for the Sensex in 2026.
Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.
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