Global investors are increasingly shifting capital toward Chinese artificial intelligence companies, looking to diversify portfolios and position for the next major AI breakthrough. The move comes as concerns grow that parts of the U.S. technology sector, particularly AI stocks on Wall Street, may be entering speculative bubble territory.
Interest in China’s AI sector is also being fueled by Beijing’s push for technological self-sufficiency. Authorities have fast-tracked high-profile listings of domestic chipmakers, including Moore Threads and MetaX, both of which made market debuts this month and attracted strong investor attention.
Many overseas investors believe China is narrowing the technology gap with the United States as government support for AI and semiconductor firms intensifies. This has coincided with rising unease over stretched valuations among U.S.-listed AI leaders.
U.K.-based asset manager Ruffer said it has deliberately reduced exposure to the so-called Magnificent Seven U.S. tech giants, while exploring greater allocation to Chinese companies such as Alibaba to gain exposure to China’s AI growth story.
According to Gemma Cairns-Smith, an investment specialist at Ruffer, the U.S. still leads in cutting-edge AI, but China is closing the gap faster than many expect. She noted that competitive advantages in AI may prove narrower and less durable as the global landscape evolves.
Ruffer is tapping into the theme through Chinese technology heavyweights like Alibaba, which operates its own AI chip unit, runs the large language model Qwen, and continues to invest heavily in cloud infrastructure.
Tech rivalry boosts demand for Chinese AI
Global asset managers are increasingly eyeing Chinese AI firms as a growing number of startups list in mainland China and Hong Kong. The surge in interest follows the rapid rise of DeepSeek, widely viewed as China’s answer to ChatGPT, which has reignited enthusiasm for domestic AI innovation.
A recent report from UBS Global Wealth Management described Chinese technology stocks as “most attractive,” citing the appeal of geographic diversification, strong policy support, and accelerating AI commercialization.
Valuation differences are also drawing attention. The tech-heavy Nasdaq trades at roughly 31 times earnings, compared with about 24 times for Hong Kong’s Hang Seng Tech Index, which includes major AI-linked firms such as Alibaba, Baidu, Tencent, and chipmaker SMIC.
Riding this momentum, U.S.-based investment adviser Rayliant helped launch a Nasdaq-listed fund in September designed to offer exposure to what it describes as China’s equivalents of companies like Google, Meta, Tesla, Apple, and OpenAI.
Brendan Ahern, chief investment officer at KraneShares, said the rapid rise of Chinese AI chipmakers such as Cambricon highlights the pace and scale of innovation across China’s AI and semiconductor industries. He added that the urgency created by the Sino-U.S. tech rivalry is drawing heightened investor attention.
KraneShares’ KWEB exchange-traded fund, which focuses on offshore-listed Chinese technology stocks including Tencent, Alibaba, and Baidu, has risen sharply this year, with assets growing to nearly $9 billion. Another KraneShares ETF targeting China’s onshore tech and semiconductor firms has also expanded significantly.
Jason Hsu, founder of Rayliant Global Advisors, said the U.S. retains an edge in AI innovation, while China benefits from strengths in engineering, manufacturing capacity, and energy supply. Rayliant has partnered with China Asset Management to launch a Nasdaq-listed ETF focused on Chinese companies developing transformative technologies.
Hsu added that U.S. technology restrictions have pushed China to invest more heavily in foundational technologies, creating opportunities for investors willing to manage geopolitical risk through diversification.
Hype concerns temper enthusiasm
Despite the optimism, some fund managers caution that enthusiasm around Chinese AI stocks may be running ahead of fundamentals. Shares of MetaX surged about 700% in its Shanghai debut, while Moore Threads jumped roughly 400%, raising concerns about speculative excess.
Kamil Dimmich, portfolio manager at North of South Capital, said valuations among newly listed Chinese chipmakers lack fundamental support and are largely driven by hype. His fund maintains exposure to established names such as Alibaba and Baidu, which have invested more conservatively in AI compared with U.S. peers.
Carol Fong, group CEO of CGS International Securities, advised investors to be selective, focusing on companies that benefit directly from China’s self-reliance strategy in AI and semiconductors while maintaining exposure to global leaders.
She added that investors are actively searching for potential future leaders in areas such as robotics and AI, where policy direction is clearer and valuations appear more attractive relative to Western counterparts. However, she emphasized the importance of balancing exposure in a fragmented, geopolitics-driven technology cycle.
