Global investors turn to Chinese AI as Wall Street fears bubble

Reuters :

Global investors are increasing their wagers on Chinese artificial intelligence companies, betting on the next DeepSeek and seeking to diversify, with concerns growing about a speculative bubble in the sector on Wall Street.

Demand for China’s AI companies is also being stimulated by Beijing’s push for tech independence. China has fast-tracked blockbuster listings of chipmakers, notably Moore Threads dubbed ‘China’s Nvidia’ , and MetaX which both debuted this month.

Foreigners see China closing the tech gap with the U.S. as Beijing steps up support for AI chipmakers, spurring bets on Chinese companies just as worries grow over lofty valuations on U.S.-listed AI stocks.

U.K.-based asset manager Ruffer, for example, said it has “deliberately limited exposure” to the Magnificent Seven – the U.S. tech giants – and is looking to add positions in Alibaba for a bigger 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 moat may not be as wide, or as deep, as many think … The competitive landscape is shifting.”

Ruffer is gaining exposure to the AI theme through Chinese tech giants such as Alibaba, which operates an AI chip unit, owns large language model Qwen, and is ploughing money into cloud infrastructure.

Global asset managers are increasingly eyeing Chinese AI firms as a wave of startups lists on the mainland and in Hong Kong, seeking to tap into surging investor appetite following the meteoric rise of DeepSeek, China’s answer to ChatGPT.

UBS Global Wealth Management in a report this month rated China tech as “most attractive”, citing investors’ search for geographical diversification and China’s “strong policy backing, technological self-reliance, and rapid AI monetization”.

Riding the momentum, U.S. investment adviser Rayliant helped launch a Nasdaq-listed fund in September that gives investors access to “China’s versions of stocks like Google, Meta, Tesla, Apple, and OpenAI”.