Haitong Securities: China tech bubble risk low, bullish on domestic AI hardware supply chain
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Haitong Securities research indicates that the risk of a bubble in China's technology sector is low, though local micro-structural issues still need time to digest. The firm expects the sector to strengthen subsequently, citing independent narratives and financial conditions for China's AI development by 2027. Haitong recommends diversified allocation while remaining bullish on AI-driven tech sector opportunities. It advises focusing on the domestic computing chain benefiting from improved domestic AI capabilities and policy support, specifically recommending domestic chips, semiconductor equipment and materials, as well as hardware and materials in tight supply with rising bargaining power, such as communication equipment, PCBs, and upstream materials. Risks include unexpected global liquidity tightening, slower-than-expected AI commercialization and data center investment, and historical pattern failures.
Source report
Guotai Haitong Securities has assessed that the risk of a bubble in China's technology sector remains low. While certain microstructural issues in specific segments may take time to resolve, the sector is expected to strengthen further.
The firm notes that China's AI development by 2027 possesses independent narrative drivers and favorable financial conditions. It recommends focusing on domestic supply chains and critical hardware and materials segments facing supply constraints.
Investment Recommendations
The institution advises maintaining a diversified allocation while remaining positive on AI-driven technology sector opportunities. Key areas of focus include:
- Domestic computing power chains benefiting from:
- Enhanced domestic AI capabilities
- Policy-driven support
- Recommended sectors:
- Domestic chips / semiconductor equipment and materials
- Hardware and materials with rising industry bargaining power, including:
- Communication equipment
- PCB (Printed Circuit Board) and upstream materials
Risk Factors
- Global liquidity tightening exceeding expectations
- AI commercialization and data center investment progress falling short of projections
- Historical patterns becoming invalid
Source
金吾资讯Eastern