Perhaps the biggest outcome of the latest US-China trade talks is China’s increased trust in its own technology. Alibaba and Baidu have surged in their stocks this week after the news of AI advances and business trading. Huawei promoted Nvidia’s AI chip system at the same time that Beijing extended its investigation to US chip makers. Currently, Chinese regulators are discouraging domestic tech giants from purchasing Nvidia chips, the Financial Times reported, citing an unknown source. “At this point, it is unlikely that Chinese companies will be able to choose to completely eliminate foreign chips,” said Brian Taycanko, an analyst at Stansbury Research. “But the news coming out of China like this is no coincidence. It is intended to send a message and potentially weaken President Trump’s hands in trade war negotiations.” “For the time being, the safe play is to stick to famous people in the industry, such as Smic, Alibaba, Baidu,” the analyst said. “There is no way to tell where the trade war will ultimately end. China’s chip ecosystem is growing rapidly, but it also requires a great deal of risk for small players with limited access to capital.” It appears that China’s leading AI players who survived Nvidia’s restrictions have survived US restrictions on Nvidia so far. Analysts at Bernstein said in a memo on Friday that they assume Chinese internet companies will continue to have access to NVIDIA-based computing power overseas. Bernstein analysts are overweight against both US listed Alibaba and Hong Kong listed Tencent. “Tactically, the second quarter of 2025 felt like a moment of narrative change in the market’s perception of AI-driven growth in China,” they said. “The latest news flow around China banning the purchase of Nvidia chips is useless at least within the country, with margins of AI development progress,” a Bernstein analyst said. But they noted that over time, domestic chip alternatives will at least “attack territory “too much” enough.” Technology self-sufficiency Ramp-up with Chinese-made chips is just part of Beijing’s long-term ambitions for technology self-sufficiency. The strategy is expected to “produce accelerated localization of key components (sensors, motors, reducing agents, batteries), and China-based suppliers will dominate the global cost curve and increase competitive pressure on current leaders,” analysts at Morgan Stanley said in a report on thematic investments in Asia on Wednesday. The company’s first-ever focus list of Asian themes recommended a handful of mainland China-based companies, primarily “AI & Tech Diffusion.” Morgan Stanley’s screen searched for stocks based on factors such as valuation and revenue expectations in addition to theme exposure. The narrow choice includes Naura Technology, a leading semiconductor equipment manufacturer, listed in Shenzhen. Analysts at Morgan Stanley also highlighted Shenzhen-listed Invance Technology and the potential of humanoid robots, as well as Hong Kong-listed electric vehicle company XPENG, citing the advantages of advanced driver-assisted technology and investments in humanoid robotics. Furthermore, “Tencent needs to profit as the market changes its focus from [large language model] According to analysts at Morgan Stanley, they have the capabilities to be AI applications and monetized. On Tuesday, the company unveiled new AI tools for industrial use at the two-day digital ecosystem summit in Shenzhen. The plan calls for the integration of AI.
