Experts: AI will boost stock market

The global artificial intelligence surge, both technologically and investment-wise, combined with China's emphasis on new quality productive forces, will boost AI-related A-share performance, which in turn will drive up associated indexes this year, said experts.

While the benchmark Shanghai Composite Index shed 0.41 percent on Tuesday, A-share AI companies registered an average share price increase of 1.15 percent. With this, share prices of these AI companies have jumped nearly 19 percent since Feb 19, when trading resumed after the Spring Festival holiday.

The global AI boom serves as one major impetus, especially after ChatGPT's creator Open AI released text-to-video generator Sora on Feb 16. Nvidia, the major supplier for Open AI's graphics chips, saw its shares hit record highs, overtaking Amazon and Google's parent company Alphabet in terms of market value.

Zhang Yidong, chief global strategist at Industrial Securities, said the global AI phenomenon will not only buoy the US bourse, but also drive up the value of A-share tech companies, thus helping boost A-share performance in general.

More importantly, China promised in this year's Government Work Report to launch an "AI plus" initiative to accelerate the technology's commercial applications. Meanwhile, new quality productive forces, which have been emphasized in the report, also include emerging industries such as AI, computing and humanoid robots. All these suggest an increasing focus on industrial investment, said analysts from Guotai Junan Securities.

Liu Chenming, chief strategist at GF Securities, said AI will serve as a major force empowering industries' intelligent digitalization in China. The application of AI technologies will help improve total factor productivity and the country's structural transformation and upgrading. This is also in line with this year's Government Work Report which calls for high-quality development, he said.

Ethan Wang, head of investment strategy for wealth management at Standard Chartered China, said A-share investors should pay particular attention to AI applications in China given the country's advantages in application scenarios in internet and big data modalities, as well as the commercialization of innovative technologies. Specifically, device makers integrating AI services and the commercial use of AI in business scenarios will churn out the most investment opportunities in China, Wang said.

Analysts from Kaiyuan Securities suggested A-share investors search for opportunities related to animation along with film and television companies, especially those possessing well-established intellectual property, as the application of multimodal AI will significantly improve their efficiency and reduce costs.

Opportunities can also be found among semiconductor firms as iteration in AI foundation models will drive up computing demand, said experts from China International Capital Corp Ltd.

Li Zhan, chief economist at China Merchants Fund, said that technological innovation will be the major investment theme in China for many years to come. Industries which are supported by favorable industrial policies and the country's resources will generate the most investment opportunities, among which AI is included.

Experts from UBS Global Wealth Management's Chief Investment Office believe that AI will be the fastest growing tech sector globally over the next decade, with the possibility of it growing into the largest tech sector in 10 years' time.