From Nvidia to DeepSeek: Why global investors are quietly turning to China’s AI companies

Global investors are beginning to rethink their exposure to artificial intelligence. The change is subtle, almost understated, yet it shows up in portfolio decisions, fund launches, and new listings across China’s tech markets. A recent Reuters report said capital that once crowded into U.S. AI leaders is starting to look east, driven by a mix of valuation concerns, policy signals from Beijing, and the search for the next breakout winner after DeepSeek’s rapid rise.

Global Investors Pivot to China’s AI Boom as Wall Street Valuation Fears Mount

The move is less about abandoning the U.S. and more about hedging concentration risk. Wall Street’s AI trade has become crowded, expensive, and heavily tied to a small group of dominant names. China, by comparison, offers a broader field of companies trading at lower multiples, backed by a government that has made technology self-reliance a national priority.

That policy push is already reshaping China’s capital markets. Beijing has fast-tracked high-profile listings of domestic chipmakers, turning IPOs into statements of intent. Moore Threads, often described as “China’s Nvidia,” and MetaX Integrated Circuits both debuted this month, delivering eye-catching first-day gains that reignited global interest in China’s semiconductor ambitions.

For overseas investors, the appeal sits at the intersection of valuation and momentum. U.S. tech stocks, led by the so-called Magnificent Seven, trade at levels that leave little margin for error. China’s tech benchmarks sit lower, creating room for upside if execution improves and policy support holds.

Ruffer, a U.K.-based asset manager, has made that trade-off explicit. The firm told Reuters that it has “deliberately limited exposure” to the Magnificent Seven and is adding positions tied to China’s AI theme, including Alibaba.

“While the U.S. remains the leader in frontier AI, China is rapidly narrowing the gap,” said Gemma Cairns-Smith, an investment specialist at Ruffer. “The moat may not be as wide, or as deep, as many think … The competitive landscape is shifting.”

Alibaba sits at the center of that thesis. The company runs its own AI chip unit, develops the Qwen large language model, and continues to invest heavily in cloud infrastructure. For global funds, it offers a way to gain AI exposure inside a business that already generates scale revenue.

Interest has spread well beyond a single stock. Asset managers are tracking a wave of Chinese AI startups listing on the mainland and in Hong Kong, hoping to capture demand sparked by DeepSeek’s emergence as China’s answer to ChatGPT. The story has become familiar to investors: an early success creates proof of concept, capital follows, and the ecosystem accelerates.

The AI Tech War Is Reshaping Portfolios as Investors Chase China’s Next DeepSeek

According to Reuters, UBS Global Wealth Management said in a recent report that China tech is “most attractive,” pointing to rising investor demand for geographic diversification and Beijing’s policy support for domestic innovation. Reuters noted that valuation gaps add to the appeal, with the Nasdaq trading at roughly 31 times earnings compared with about 24 times for Hong Kong’s Hang Seng Tech index, which includes companies such as Baidu, Tencent, and SMIC.

New investment vehicles are reinforcing the trend. Rayliant Global Advisors helped launch a Nasdaq-listed fund that gives U.S. investors access to what it describes as China’s equivalents of Google, Meta, Tesla, Apple, and OpenAI. The pitch leans into familiarity, framing Chinese tech exposure in terms Western investors already recognize.

Exchange-traded funds tell a similar story. KraneShares’ KWEB ETF, which holds offshore-listed Chinese internet stocks including Tencent, Alibaba, and Baidu, has surged this year, bringing its assets to nearly $9 billion. A separate KraneShares fund focused on onshore tech names, including chipmakers Cambricon and Advanced Micro-Fabrication Equipment, has grown alongside it.

Brendan Ahern, chief investment officer at KraneShares, points to the speed of progress among Chinese AI chipmakers as evidence of scale across the sector. The urgency created by the Sino-U.S. tech conflict plays a role. “The element of this race narrative, this urgency, is to the benefit of the companies,” he said. “It’s like yelling fire, right? When you make it an emergency, you get a lot of attention.”

That urgency shows up in performance. MetaX Integrated Circuits, founded by former AMD executives, jumped roughly 700% in its Shanghai debut last week. Moore Threads followed a similar path days earlier, with a surge of nearly 400%. The numbers underline investor appetite, though they also fuel debate about sustainability.

Skepticism remains. Some global fund managers question whether listed Chinese chipmakers can justify their valuations on fundamentals alone. “None of the chip companies that are currently listed have any sort of valuation support and are almost entirely driven by hype,” said Kamil Dimmich, partner and portfolio manager at North of South Capital. His fund holds Alibaba and Baidu, companies that have spent less on AI development than U.S. peers yet trade at more restrained multiples.

That tension defines the current moment. Optimists see China closing the technology gap through engineering strength, manufacturing scale, and reliable power supply. Jason Hsu, founder of Rayliant Global Advisors, frames it as a balance of strengths. The U.S. leads in innovation. China brings advantages in execution. U.S. export curbs have forced Chinese firms to fund domestic alternatives and build from scratch, a costly process that also seeds long-term capability.

Carol Fong, group CEO of CGS International Securities, advises selectivity. She expects capital to flow toward companies that align with China’s self-reliance goals in AI and semiconductors, while also offering exposure to established global leaders. Investors are scanning robotics, AI, and adjacent high-tech segments where policy direction appears clearer and valuations appear more reasonable than in Western markets.

The shift from Nvidia to DeepSeek is less about picking sides and more about recalibrating risk. Investors are spreading bets across systems, geographies, and political environments. In a market shaped by geopolitics and valuation pressure, China’s AI companies offer a different mix of risk and reward, one that global capital is no longer willing to ignore.