Morning Star released a research report stating that Chinese chip manufacturers are currently benefiting from the growth in capital expenditure on artificial intelligence. However, in the long run, internet companies will be the ultimate beneficiaries. The report lists Tencent (00700.HK) and Alibaba (09988.HK) as favorites, noting that Tencent and Alibaba's existing businesses can generate profits. Even if the adoption or monetization of AI does not proceed as expected, their operational conditions can still maintain considerable resilience. Additionally, AI is also conducive to the development of their internet, advertising, and gaming businesses.

This line indicates that China's AI model continues to see an increase in adoption rates due to its speed and cost competitiveness, however, the profit prospects of AI companies still face challenges; the already listed companies Zhipu (02513.HK) and MiniMax both recorded strong year-on-year revenue growth in the first half of this year, but they continued to report net losses.

Despite strong demand, Morningstar believes that the valuations of Chinese AI chip manufacturers may be too high. The stock prices of SMIC (00981. HK), Huahong (01347. HK), and ChangXin Technology (688825. SH) are still expensive relative to their predicted fair values. High capital expenditures also put pressure on free cash flow. Currently, it is estimated that the supply of Chinese AI chips will continue to fall short of demand until 2028, and it may not be until 2029 that there will be an oversupply.

(Hong Kong stock quotes are delayed by at least fifteen minutes. Short selling data as of 2026-11-03 16:25. A-share quotes are delayed by at least fifteen minutes.)