Goldman Sachs: AI Reshapes China's Stock Market, Dual AI Power Structure Emerges

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Goldman Sachs reported that the Fear and Greed Index for Chinese AI stocks has shifted sharply toward greed, with market value rising nearly $5 trillion since early 2025. AI-related stocks now account for 42% of total market capitalization and 57% of trading volume in A-shares and H-shares. China leads in rare earths, power equipment, and optical modules, building a domestic AI value chain. The firm estimates that Chinese AI firms have a $7.6 trillion weighted market capitalization, representing 10% of global AI value and 24% of revenue.
CoinDesk reports:

Goldman Sachs released a research report stating that since the DeepSeek moment in early 2025, Chinese AI-related listed companies have generated nearly $5 trillion in market capitalization through stock price increases and IPOs; AI stocks now account for 42% of the total market capitalization and 57% of the trading volume of A-shares and H-shares, fundamentally transforming the landscape of China’s stock market.

The report notes that the narrative of a global AI "duopoly"—comprising two independent AI ecosystems, one led by the United States and its key trading partners, and the other by China—is attracting growing investor attention. China has long been a key export hub in the global AI supply chain, accounting for over 50% of global market share in areas such as rare earth production and refining, power equipment, PCBs, optical modules, and mature-node semiconductors. As its domestic AI technologies advance, China has gradually built an internal AI value chain encompassing advanced semiconductors, open-source large language models, and application layers, positioning it to compete with the U.S.-centric AI ecosystem. The bank estimates that Chinese AI companies, weighted by their exposure to AI-related businesses, have a combined market capitalization of approximately $7.6 trillion, representing about 10% of global AI-related market value and profits, 14% of capital expenditures, and 24% of revenue.

The row categorizes Chinese AI stocks into two narratives: First, over 360 export-oriented companies with a combined market capitalization of approximately $1.7 trillion, where overseas revenue accounts for more than 40%; these are largely in AI infrastructure and power sectors and can be seen as proxies for the Western AI capital expenditure boom. Second, over 880 companies primarily serving domestic demand, with a combined market capitalization of approximately $3.2 trillion and overseas revenue below 10%, benefiting from increased AI capital spending by domestic ultra-large cloud service providers, surging application demand, and policy-driven technological self-reliance.

Export-oriented AI stocks delivered a cumulative return of 126% from early 2025 to June 2026, outperforming domestic-focused peers by approximately 84 percentage points. However, since the global AI correction in late June, they have declined 23% from their highs, narrowing their relative advantage by about 10 percentage points.

In terms of investment strategy, the bank remains bullish on 20 leading Chinese AI export stocks despite acknowledging geopolitical and trade policy risks, with an average overseas revenue share of 66% in the first half of 2026, an expected two-year EPS compound annual growth rate of 38%, and a forward P/E ratio of 21x in 2027. It has also selected 20 domestic AI champions, with over 90% of sales generated within mainland China, an expected future profit CAGR of 33%, and a forward P/E ratio of 23x. The bank has updated its “China Selected AI Portfolio” to include 50 stocks, covering five key sectors: power, semiconductors, infrastructure, models, and applications. The equally weighted portfolio currently trades at a forward P/E ratio of 31x for the next 12 months, with an expected two-year profit growth rate of 46% and approximately 58% of revenue directly tied to AI-related businesses. See table below.

The report notes that there remain significant gaps between China and the U.S. in the AI value chain in terms of market capitalization, profitability, and product pricing. Domestic supply chain bottlenecks and the multiplicative nature of AI technology mean that achieving comprehensive AI self-sufficiency in China will be a long and challenging journey.

Goldman Sachs' updated list of 50 stocks in its "China Select AI Portfolio" is as follows:

Electricity

  • Weichai (02338.HK) -0.640 (-2.287%) Short interest: $131 million; Ratio: 25.407% | Buy (Included in Confident Buy List)
  • Yingliu Co., Ltd. (603308.SH) -0.740 (-2.159%) | Buy
  • Kstar (002518.SZ) -0.760 (-2.367%) | Buy
  • CATL (03750.HK) +3.400 (+0.692%) Short interest: $503 million; ratio: 32.203% | Buy
  • Siyuan Electric (002028.SZ) +0.560 (+0.466%) | Buy
  • Hongfa Shares (600885.SH) -0.510 (-1.581%) | Buy

Semiconductor

  • Shengyi Technology (600183.SH) -4.140 (-3.335%) | Buy (Included in Confirmed Buy List)
  • Anji Technology (688019.SH) -2.800 (-1.390%) | Buy
  • Tianyue Advanced (02631.HK) -2.250 (-3.566%) Short interest: $1.72 million; Ratio: 3.801% | Neutral
  • SMIC (00981.HK) -1.450 (-2.515%); Short volume: $322 million; Short ratio: 13.276% | Buy
  • Hua Hong Semiconductor (01347.HK) -4.700 (-4.971%) Short volume: $352 million; Short ratio: 20.440% | Buy
  • VeriSilicon (688521.SH) -11.020 (-7.249%) | Buy
  • Tianshu Zhixin (09903.HK) -0.300 (-0.340%) Short volume: $68.5 million; Short ratio: 19.960% | Buy
  • Biren Technology (06082.HK) -1.100 (-3.548%) Short volume: $43.8 million; Short ratio: 6.123% | Buy
  • Cambricon (688256.SH) -14.110 (-1.431%) | Buy
  • ChangXin Technology (688825.SH) -2.660 (-5.216%) | Buy
  • GigaDevice (03986.HK) -19.000 (-4.815%) Short volume: $32.7 million; Short ratio: 7.957% | Buy
  • Montage Technology (06809.HK) -13.400 (-4.996%) Short interest: $26.5 million; ratio: 5.974% | Buy
  • North Hua Chuang (002371.SZ) -6.060 (-1.020%) | Buy
  • SMIC (688012.SH) +0.210 (+0.068%) | Buy
  • Hua Hai Qing Ke (688120.SH) +3.630 (+1.611%) | Neutral
  • Innoscience (02577.HK) -1.120 (-3.048%) Short volume: $26.1 million; Short ratio: 17.459% | Buy
  • JCET Group (600584.SH) -2.750 (-4.383%) | Neutral
  • Huada Jiutian (301269.SZ) +5.650 (+6.125%) | Neutral

Infrastructure

  • Enwave (002837.SZ) -2.040 (-4.009%) | Buy
  • Luxshare Precision (02475.HK) -1.050 (-2.077%) Short volume: $25.6 million; Short ratio: 15.563% | Buy
  • Runze Technology (300442.SZ) -0.990 (-1.689%) | Buy
  • Kingsoft Cloud (03896.HK) +0.045 (+0.931%) Short interest: $21.1 million; Short ratio: 14.164% | Buy
  • Zhiwei Xuchuang (03308.HK) -71.500 (-7.337%) Short volume: $122 million; Short ratio: 9.431% | Buy
  • New Hua Sheng (300502.SZ) -22.600 (-6.105%) | Buy
  • Tianfu Communications (300394.SZ) -5.500 (-2.340%) | Buy
  • Shennan Circuits (002916.SZ) -19.470 (-5.607%) | Buy
  • Hubei Electronics Co., Ltd. (002463.SZ) -2.670 (-2.378%) | Buy
  • Shenghong (02476.HK) -6.000 (-3.319%) Short volume: $114 million; Short ratio: 19.178% | Buy
  • Foxconn Industrial Internet (601138.SH) -4.020 (-7.170%) | Buy

Large AI models

  • Zhipu (002513.HK) | Buy
  • Minimax-W (00100.HK) +1.000 (+0.469%) Short interest: $233 million; Ratio: 20.641% | Buy
  • SenseTime-W (00020.HK) -0.015 (-1.250%); Short interest: $115 million; Short ratio: 31.493% | Neutral

App (AI+)

  • Alibaba (09988.HK) +1.200 (+1.121%) Short interest: $817 million; Ratio: 16.094% | Buy
  • Tencent (00700.HK) +1.000 (+0.235%); Short interest: $674 million; Short ratio: 11.264% | Buy
  • WuXi AppTec (02359.HK) -0.200 (-0.096%) Short interest: $264 million; Short ratio: 39.590% | Buy
  • Catalyst (06821.HK) +1.000 (+0.645%) Short interest: $3.44 million; ratio: 6.713% | Buy
  • Hang Seng Electronics (600570.SH) +0.180 (+0.924%) | Buy

App (Physical)

  • BYD (01211.HK) -1.250 (-1.653%) Short interest: $517 million; Ratio: 28.133% | Buy (Included in Confident Buy List)
  • Horsea-W (02525.HK) -0.240 (-1.528%) Short volume: $19.8 million; Short ratio: 32.529% | Buy
  • Horizon-W (09660.HK) -0.120 (-2.916%) Short volume: $80.9 million; Short ratio: 30.887% | Buy
  • Lenovo Group (00992.HK) -0.500 (-1.523%) Short interest: $668 million; Short ratio: 35.946% | Buy
  • Sanhua Intelligent Control (02050.HK) -0.440 (-1.932%) Short volume: $3.43 million; Short ratio: 4.231% | Buy
  • Lingyi Intelligent Manufacturing (01688.HK) -0.075 (-1.487%) Short interest: $3.37 million; Ratio: 10.016% | Buy
  • Double Ring Transmission (002472.SZ) -1.660 (-4.408%) | Buy

Stocks removed include Kuaishou-W (01024.HK) -0.840 (-2.791%), short interest $209 million; ratio 21.112%; Pony.ai-W (02026.HK) +2.280 (+5.024%), short interest $5.21 million; ratio 9.348%; Xpeng-W (09868.HK) +0.140 (+0.365%), short interest $147 million; ratio 34.925%; Xiaomi-W (01810.HK) -1.440 (-5.547%), short interest $1.564 billion; ratio 34.428%; Han's Laser (002008.SZ) -5.320 (-7.046%); GDS-W (09698.HK) -0.360 (-1.190%), short interest $35.8 million; ratio 52.527%; Century Link (VNET.US); and Moxi Semiconductor (688802.SH) -12.530 (-2.700%).

(HK stocks: Quote delay of at least 15 minutes. Short interest data as of 2026-10-12 16:25.) (A-shares: Quote delay of at least 15 minutes.) (US stocks: Real-time streaming quotes; except OTC market stocks, which have a delay of at least 15 minutes.)

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