UBS says to buy China tech stocks as AI ecosystem grows
China’s expanding AI ecosystem and easing U.S.-China tensions are reviving the case for Chinese equities, in particular the technology sector, according to UBS. Suresh Tantia, head chief investment officer of Asia equity strategy at UBS Global Wealth Management, told CNBC’s ” Squawk Box Asia ” that easing tensions between Washington and Beijing after last week’s Trump-Xi summit should allow investors to refocus on market fundamentals rather than geopolitical escalation risks. “It seems like both countries are following the policy of live and let live, and that’s not bad news from a market perspective, because markets can go back to fundamentals,” Tantia said Tuesday. So far this year, Chinese equities have lagged behind regional peers such as South Korea and Taiwan that have been riding the tech boom. Tantia, however, said the outlook for the country’s technology sector remains underpinned by structural growth in AI-related investment. “What we can see is that China is building its own AI ecosystem, similar to what the U.S. has done, and that AI ecosystem is going to create a lot of investment opportunities for domestic companies. And the market is huge,” he said. Tantia pointed to strong earnings from Chinese technology firms, particularly in cloud computing. Chinese tech giant Baidu on Monday posted a 49% surge in revenue in its AI-focused business to 13.6 billion yuan ($2 billion). Chinese AI company Zhipu, which listed in January, last month reported its revenue rose about 132% in 2025 from a year earlier. “Looking at the valuation and double-digit earnings growth, we think from a risk-reward perspective it makes a lot of sense to for investors to buy China equity market and China tech stocks,” Tantia said. .HSI YTD mountain Performance of the Hang Seng Index year-to-date On Monday, China reported a slew of underwhelming economic data for April with consumption, industrial output and investment growth missing market expectations as the fallout from the Iran war dampened momentum in the world’s second-largest economy. While Tantia acknowledged that weak economic data could continues to weigh on sentiment in the near term, he said valuations and earnings prospects were compelling enough to warrant increasing exposure to the market. The bullish call comes as investors increasingly rotate into AI-linked names globally, driving sharp rallies in semiconductor stocks from the U.S. to Asia — particularly in South Korea and Taiwan. UBS prefers Hong Kong-listed Chinese tech shares, citing attractive valuations compared with mainland markets. “At this kind of level, we think H-shares make a lot of sense. Valuations are cheaper, much cheaper compared to the A-share market.” H-shares refer Hong Kong-listed securities, while A-shares trade on mainland Chinese exchanges. Outside technology, Tantia said UBS also sees opportunities in Chinese financials and commodity-linked industrial names, adding that financial stocks could benefit from investors shifting money out of low-yielding bank deposits into equities in search of dividends. Commodity-linked sectors could also gain from higher raw material prices, he added, with industrials and commodity stocks likely to benefit from the trend. “We are seeing rotation coming from households and institutional investors, from banking deposits into the equity market to chase those yields,” he said.
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