UBS Backs China Tech as AI Ecosystem Expands

CNBC reported Tuesday that UBS is urging investors to add China tech stocks, citing a maturing domestic AI ecosystem and improving geopolitical conditions as the core investment thesis.

UBS Sees Fundamental Shift in China Tech Case

Suresh Tantia, head chief investment officer of Asia equity strategy at UBS Global Wealth Management, told CNBC’s Squawk Box Asia that last week’s Trump-Xi summit has meaningfully reduced geopolitical noise. He described the bilateral posture as a “live and let live” arrangement, arguing markets can now reprice Chinese equities on fundamentals rather than escalation fears. Tantia pointed to double-digit earnings growth and attractive valuations in Hong Kong-listed Chinese tech shares as the primary drivers of his bullish stance. UBS specifically prefers H-shares, the Hong Kong-listed class, over mainland A-shares, which trade at a sizeable valuation premium.

AI Build-Out Powering Earnings Momentum

China tech stocks are drawing fresh attention as corporate results confirm rapid revenue growth in AI-adjacent businesses. Baidu reported a 49% year-on-year revenue surge in its AI segment on Monday, reaching approximately $2 billion for the quarter. Chinese AI firm Zhipu, which completed its public listing in January, separately disclosed that its full-year 2025 revenue climbed roughly 132% from the prior year. Tantia told CNBC that China is constructing its own AI stack in a manner comparable to what U.S. technology firms have assembled over the past decade, and that the domestic market is large enough to sustain a multi-year investment cycle.

Background: China Equities Have Lagged Regional Peers

Despite periodic rallies, Chinese equities have underperformed regional neighbors for much of 2026. South Korea and Taiwan have captured a larger share of the global AI-driven tech trade, benefiting from semiconductor exposure. China’s April economic data, released Monday, added near-term uncertainty. Consumption, industrial output, and investment figures all fell short of consensus estimates, with analysts citing spillover effects from the Iran conflict as a drag on momentum in the world’s second-largest economy. Tantia acknowledged the soft data but said it was insufficient to offset the valuation and earnings case.

Beyond Tech: Financials and Commodities Also in Focus

UBS is not limiting its China call to technology alone. Tantia flagged Chinese financial stocks as a secondary opportunity, arguing that households and institutional investors are rotating out of low-yield bank deposits and into equities in search of dividend income. Commodity-linked industrial names round out the bank’s preferred exposure list, with higher raw material prices seen as a potential tailwind for that segment.

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