China Wins the AI Race
whopaulhugh@whopaulhugh
−7.3%
since Oct 8
The idea
I believe China catches and passes the US in AI over the next few years, winning on models, chips, and power all at once. The core is Alibaba and Baidu, since both build models, run clouds, and design their own AI chips, with Chinese chip, data center, cloud, and solar names around them, plus broad China tech exposure and outside copper and uranium miners for the power build. I'm spreading it across 18 holdings with no single bet dominating, keeping 8% in cash, and planning to hold for years rather than trade the headlines.
What it owns
- China's leading AI model builders also run the country's biggest clouds and design their own chips, competing across all three layers of the AI stack. · Alibaba Group HoldingIt builds Qwen models, runs China's largest cloud and designs its own AI chips including the Zhenwu V900., BaiduIt competes across both AI models with Ernie and AI chips through its Kunlunxin unit, hitting two layers of the stack., KraneShares CSI China Internet ETFIt holds Tencent and other major Chinese internet companies that integrate AI into apps for hundreds of millions of users.26%
- Copper and uranium miners sell into China's power and grid buildout regardless of whether Chinese stocks stay cheap, gaining from the physical infrastructure the take depends on. · Freeport-McMoRanIt mines copper, which grids, power plants and data centers cannot do without, and gets paid regardless of stock valuations., CamecoIt mines uranium and China is building more nuclear reactors than any other country to power its AI infrastructure., Southern CopperIt holds some of the world's largest copper reserves and supplies the metal that grids and data centers require., Rio TintoIt sells iron ore and copper to China, which needs both metals for the power plants, grids and data centers the take requires.25%
- Data centers, cloud platforms and AI products like robotaxis convert China's AI buildout into revenue and customer adoption. · GDS HoldingsIt builds and operates data centers where Chinese AI companies train and serve models, leasing capacity to the ecosystem., Kingsoft Cloud HoldingsIt rents computing power for AI work, directly reflecting demand from Chinese AI companies for cloud infrastructure., VNET GroupIt leases data center space and power to Chinese cloud and AI companies, hosting the infrastructure for their growth., Hesai GroupIt makes lidar sensors that let cars and robots see, enabling the hardware side of physical AI systems., Pony AIIt operates robotaxis, showing Chinese AI working in the real world as more cities permit driverless operations.18%
- Chinese chipmakers and equipment suppliers gain domestic orders diverted by US export limits, breaking China's dependence on foreign chip technology. · Invesco China Technology ETFIt holds China's chipmakers that mostly trade in Shanghai and Hong Kong, giving exposure to the domestic semiconductor buildout., KraneShares SSE STAR Market 50 ETFIt holds the fifty largest companies on Shanghai's STAR board, where China's chip designers and equipment makers list., ACM ResearchIt sells wafer cleaning and semiconductor tools mostly to Chinese chip factories, gaining as they expand domestic capacity.13%
- Cheap and fast solar and clean power gives China its biggest structural edge in feeding power-hungry AI data centers. · JinkoSolar HoldingIt makes solar panels at global scale and represents the cheap, fast clean power buildout that powers AI data centers., Daqo New EnergyIt makes polysilicon for solar panels and gains as China's power buildout accelerates and material prices recover., KraneShares MSCI China Clean Technology ETFIt spreads exposure across Chinese wind, battery, solar and electric car companies building clean power faster than the US.10%
- Cash8%