Foreign investors pile into China, betting on tech-driven repricing

Foreign investors are increasingly turning bullish on Chinese assets this year, betting that the country's high-quality technology stocks are poised for a historic revaluation as artificial intelligence and innovation-led growth reshape market expectations.

Global investment banks have grown more constructive on China's equity outlook.

UBS has maintained an "attractive" rating on Chinese stocks, forecasting earnings growth of 14% for the MSCI China Index in 2026.

Meanwhile, Goldman Sachs estimates cumulative global spending on AI infrastructure could reach $7.6 trillion by 2031, positioning Chinese technology companies to benefit from a broad-based expansion in global AI capital expenditure, according to reporting by Reuters. 

Goldman has also noted that global fund managers allocate just 1.2% of their portfolios to Chinese AI-related stocks, far below China's roughly 10% share of global AI market capitalization and 16% share of sector revenues. The gap points to what analysts describe as a "significantly underweight" positioning, leaving substantial room for further inflows.

A recent report from JPMorgan Chase showed that China's generative AI user base has climbed to 600 million, up 142% from 2025, while the country's internet and technology stocks continue to trade at a notable valuation discount to US peers.

The bank said recent product launches by Chinese AI startup DeepSeek, including its latest V4 model optimized for domestic semiconductors, have accelerated demand from major technology firms such as ByteDance, Tencent and Alibaba. JPMorgan expects Chinese technology stocks to outperform the broader market.

China's increasingly sophisticated research ecosystem is also drawing more foreign companies to expand local innovation capabilities.

In the first quarter, actual foreign direct investment in high-tech services, including research and design services, surged 127.8% year-on-year. In sectors ranging from intelligent driving and green technology to advanced R&D, multinational corporations are increasingly leveraging China's manufacturing and supply-chain advantages to transform the country from a production base into a source of innovation.

A survey by PwC found that 42% of companies plan to invest in China-based research and development operations serving global markets over the next two years.

For global investors, the message is becoming clearer: China is no longer being viewed solely as a cyclical trade, but increasingly as a long-term play on technological upgrading and structural innovation.