BlackRock: China AI Investments Are Stock-Specific, Not a Regional Trade

BlackRock Investment Institute (BII) has outlined its current perspective on the artificial intelligence (AI) market and its specific investment strategies for China. According to the institute, AI opportunities in China should be assessed on a stock-specific basis, focusing on individual companies rather than viewing them as a broad regional trade. This approach suggests that global investors need to scrutinize the profitability potential of Chinese companies more carefully amidst slowing growth and increasing competition.

BlackRock's assessment indicates that China holds significant advantages in specific segments of the AI value chain, such as manufacturing and batteries. The Beijing administration has also implemented various policies to support domestic AI development. However, BII emphasizes that manufacturing strength alone does not guarantee attractive equity returns, and the clarity on how companies can generate profits given slower growth and competitive pressures remains uncertain.

The institute also addressed the debate surrounding an potential AI bubble, stating that the core question is not about current valuations, but whether future earnings can sustain extraordinary levels. BlackRock CEO Larry Fink similarly dismissed concerns of an AI bubble, asserting a legitimate need for trillions in investment for energy, chips, and computing infrastructure.

As the AI theme continues to influence global markets, BlackRock maintains an overweight position in U.S. equities. The NASDAQ Composite Index has gained over 12% year-to-date, and China's tech-heavy ChiNext Index has risen more than 20%. In contrast, the MSCI China Index has seen a decline of over 10%. BlackRock identifies opportunities in "physical AI," such as robotics, where AI is integrated into hardware, and in stocks exposed to scarce industry inputs, including infrastructure plays from China to Latin America.

AI is identified by BlackRock as one of the "megaforces" shaping the 2026 market outlook. The institute notes that record capital expenditure and rising leverage are also significant drivers of market dynamics. At the heart of the discussion is whether AI can transform scarcity into abundance, and investors are encouraged to focus on the bottlenecks that will emerge during this transformation.

Analysts and market expectations suggest that bottlenecks are emerging in key areas for AI infrastructure, including power, grids, chips, and data centers. BlackRock's 2026 Midyear Global Outlook report highlights that investors should look beyond regional labels to target AI bottlenecks and enablers. In this context, the Asia-Pacific region plays a central role in AI hardware (Taiwan, Korea), physical AI (Japan, China), and natural resources (Australia).