UBS Backs China Tech Stocks as AI Boom and Trade Thaw Reshape Outlook

CNBC reported Tuesday that UBS is urging investors to add exposure to China tech stocks, citing a maturing domestic AI ecosystem and a thaw in Washington-Beijing relations following last week’s Trump-Xi summit.

Suresh Tantia, head chief investment officer of Asia equity strategy at UBS Global Wealth Management, told CNBC’s Squawk Box Asia that reduced geopolitical noise should let markets refocus on corporate earnings and valuations rather than escalation scenarios.

Trade Thaw Clears the Air for Fundamentals

Tantia argued that both governments now appear to be operating on a mutual tolerance basis. That posture, he said, removes a significant overhang that had kept many investors on the sidelines. With that risk fading, he contended that the underlying earnings case for Chinese technology companies was becoming harder to ignore.

Chinese equities have underperformed regional peers this year. South Korea and Taiwan have attracted the bulk of Asia-focused tech flows. Yet Tantia said structural AI spending inside China was building a durable growth runway for domestic players.

Earnings Data Backs the Thesis

Recent corporate results support the bullish read. Baidu posted a 49% year-on-year revenue surge in its AI-driven cloud segment, reaching 13.6 billion yuan, or roughly $2 billion. AI platform Zhipu, which listed in January, separately disclosed that its full-year 2025 revenue climbed approximately 132% compared with the prior year.

Tantia pointed to this combination of double-digit earnings growth and historically low valuations as the core of UBS’s risk-reward argument for the sector.

Hong Kong Listings Over Mainland: A Key Distinction

UBS is specifically favouring H-shares, meaning Chinese companies listed in Hong Kong, over their A-share counterparts trading on mainland exchanges. The bank views Hong Kong-listed valuations as significantly more attractive on a relative basis. That preference reflects a broader hunt for value among global fund managers rotating into AI-linked names across Asian markets.

Background: Macro Drag Has Not Derailed the Call

April economic data from Beijing was broadly disappointing. Retail consumption, industrial production, and investment growth all missed analyst forecasts, with analysts attributing part of the softness to fallout from the Iran conflict weighing on global trade momentum. Tantia acknowledged the weak data could keep near-term sentiment cautious. He nonetheless maintained that the valuation discount and earnings trajectory justified building positions now rather than waiting for macro conditions to fully recover.

Beyond technology, UBS also flagged Chinese financials and commodity-linked industrials as secondary opportunities. Tantia noted that savers migrating out of low-yield bank deposits into dividend-paying equities could provide a structural tailwind for financial stocks in particular.

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