Hong Kong/New York, December 23: Global investors are stepping up bets on Chinese artificial intelligence companies, seeking diversification and growth opportunities as concerns mount over stretched valuations and bubble-like conditions in U.S. technology stocks.
Interest in China’s AI sector has been fuelled by Beijing’s drive for technological self-reliance and a surge of high-profile listings of domestic chipmakers. Companies such as Moore Threads and MetaX Integrated Circuits, both dubbed potential Chinese rivals to U.S. semiconductor leaders, made blockbuster debuts on Shanghai’s STAR Market this month, posting gains of 400% and 700% respectively.
Foreign investors increasingly see China narrowing the technological gap with the United States as policymakers ramp up support for AI and semiconductor development, even as U.S.-listed AI stocks trade at lofty multiples.
The tech-heavy Nasdaq currently trades at about 31 times earnings, compared with around 24 times for Hong Kong’s Hang Seng Tech Index, which offers exposure to Chinese AI through companies such as Alibaba, Baidu, Tencent and Semiconductor Manufacturing International Corp (SMIC).
U.K.-based asset manager Ruffer said it has deliberately limited exposure to the U.S. “Magnificent Seven” technology stocks and is adding positions in Alibaba to gain greater exposure to China’s AI theme.
“While the U.S. remains the leader in frontier AI, China is rapidly narrowing the gap,” said Gemma Cairns-Smith, investment specialist at Ruffer. “The competitive landscape is shifting.”
Ruffer’s exposure comes via Chinese technology groups such as Alibaba, which operates an AI chip unit, owns its large language model Qwen, and is investing heavily in cloud infrastructure.
Global asset managers have also been drawn to a wave of mainland and Hong Kong listings following the rapid rise of DeepSeek, widely seen as China’s answer to ChatGPT.
UBS Global Wealth Management this month rated China technology stocks as “most attractive”, citing investor demand for geographic diversification alongside strong policy backing, technological self-reliance and rapid AI monetisation.
U.S.-based investment adviser Rayliant launched a Nasdaq-listed fund in September offering exposure to Chinese companies positioned as domestic equivalents of firms such as Google, Meta, Tesla and OpenAI.
KraneShares Chief Investment Officer Brendan Ahern said the rapid ascent of Chinese AI chipmakers such as Cambricon reflects the scale and speed of innovation driven by the Sino-U.S. technology rivalry.
“The urgency created by the tech war benefits these companies,” Ahern said.
KraneShares’ CSI China Internet ETF, which invests in offshore-listed Chinese firms including Alibaba, Tencent and Baidu, has risen by about two-thirds this year, lifting assets under management to nearly $9 billion. Another KraneShares ETF focused on onshore Chinese technology stocks has also grown sharply.
Still, some investors remain cautious. “None of the chip companies currently listed have valuation support and are almost entirely driven by hype,” said Kamil Dimmich, partner and portfolio manager at North of South Capital.
Carol Fong, group chief executive at CGS International Securities, said investors should be selective, favouring companies benefiting from China’s push for self-reliance in AI and semiconductors while maintaining exposure to global leaders.
“There is a hunt for potential leaders in high-tech segments such as robotics and AI, where policy direction is clearer and relative value is more attractive,” she said.
