LIVE MARKETS-China's high-tech hustle puts U.S. AI giants in the hot seat

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CHINA'S HIGH-TECH HUSTLE PUTS U.S. AI GIANTS IN THE HOT SEAT

China's next stock market winners will emerge from innovative companies in sectors prioritized by Beijing's upcoming five-year plan, including technology, green energy, healthcare, and experience-driven consumer brands, Bernstein said on Monday.

Bernstein analysts noted that while U.S. technology firms such as OpenAI and cloud hyperscalers focus on large, general-purpose AI models, Chinese companies are developing specialized vertical models for tasks like vision, image and video generation, coding, and translation. "Tencent looks on the leading edge when it comes to 3D object generation," said Robin Zhu, analyst at Bernstein.

The firm highlighted that U.S. companies remain benchmarks globally, stating, "U.S. firms like NVIDIA and Tesla continue to set global standards in semiconductors and smart driving, with NVIDIA currently dominating the L2++ outsourcing market"—referring to advanced driver-assistance systems bridging basic automation and full autonomy.

Bernstein added China's innovation surge is driven by policy alignment, a massive domestic data pool, and pragmatic commercialization. "The cliché that the US excels at innovation from ground zero—while China excels at scaling engagement and commercialization—probably continues to apply in an AI world," Zhu said.

The firm expects high-tech innovation, self-reliance, and consumer-led growth to drive China's next five-year plan, highlighting Tencent 0700.HK , Alibaba 9988.HK, Trip.com 9961.HK, and Innovent 1801.HK as top stock ideas.

While the U.S. is expected to lead in state-of-the-art AI in the near term, Bernstein noted China's "ready-made flywheel" of over a billion internet users and deep government support may help its tech sector close the gap faster than many expect.

(Akriti Shah)

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