tech
China's AI trade is quickly moving from infrastructure to applications. Watch these stocks
Capital flows from eager mainland China-based investors are flowing into these artificial intelligence plays.
TL;DR
- Chinese investors are enthusiastic about a new AI stock trend centered on generative engine optimization (GEO).
- Advertisers are expected to increase spending on brands appearing in AI chatbot results.
- Interest in agentic AI tools has been bolstered by Meta Platforms' acquisition of Manus.
- Bank of America analysts predict AI agents will be a top investment theme in 2026, with Tencent, Alibaba, and ByteDance having natural advantages.
- Alibaba is seen as a strong proxy for the 'AI in China' theme, with its integrated AI app Qwen boasting over 100 million monthly active users.
- Tencent's AI chatbot and advertising tools are expected to drive growth across its business lines.
- ByteDance's Doubao AI app is leading the industry in China, with potential integration into smartphones.
- Analysts anticipate a shift in advertising budgets from SEO to GEO and AEO (answer engine optimization).
- China's GEO market is projected to grow significantly, reaching 3 billion yuan ($430 million) this year.
- Investment capital from mainland China is flowing into AI stocks traded both locally and in Hong Kong, with Alibaba and Tencent being top picks.