Morgan Stanley: China's AI is entering a new phase, with empowering models and foundational models as two key investment themes

Gelonghui May 12 | Morgan Stanley releases a report indicating that China’s artificial intelligence (AI) is entering a new phase, shifting from chasing technological capabilities to capturing value, with a focus moving from training to reasoning, from technology to application, and from potential to actual profitability. The bank believes that at this stage, enablers and foundational models remain key investment themes, but widespread AI applications also present investment opportunities for beneficiaries.

In Morgan Stanley’s risk-return analysis of AI application providers, North Summit Holdings, Meitu Company, Stone Technology, Midea Group (000333), and Ecovacs Robotics (603486) performed outstandingly.

MiniMax and Zhipu are key players among China’s AI foundational model providers, while Alibaba is the best-positioned full-stack AI platform among the companies covered by the bank.

Morgan Stanley particularly recommends CATL (300750), Yingliu Co., Ltd. (603308), and Siyuan Electric (002028) as key targets in the power sector.

The bank remains optimistic about Cambricon, TianShu Zhixin, North Huachuang (002371), Semiconductor Manufacturing International Corporation (688012), ACM Research, SMIC, and Xinxing Electronics, as these AI enablers will benefit from China’s long-term trend of semiconductor localization.

(Editor: Song Zheng HN002)

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