Goldman Sachs Identifies China Stocks Poised for AI Hardware Export Boom

Goldman Sachs indicates that the robust rise in China's artificial intelligence (AI) hardware exports presents significant opportunities for specific companies listed on mainland exchanges. Under its "Go Global 3.0" thesis, the investment bank highlights China's competitive advantages within the global AI supply chain, arguing that these benefits are not yet fully reflected in equity valuations.

This strategy marks a notable shift for Goldman Sachs, directing investors towards onshore companies that produce the physical components powering AI, rather than focusing on large tech firms listed in Hong Kong. According to Kinger Lau, Chief China Equity Strategist at Goldman Sachs, China's chip exports surged by 111% year-over-year in May 2026, underscoring the intense global demand for AI hardware. In this context, Goldman Sachs identifies three priority areas: the power supply chain, hardware infrastructure (such as printed circuit boards (PCBs), optical modules, and data centers), and "physical AI applications," which include industrial AI and humanoid robots.

Analysts at Goldman Sachs state that these hardware-focused segments offer strong earnings visibility over the next couple of years. Unlike software plays or broader internet stocks, these companies possess order books and supply contracts that make future revenues relatively predictable. Lau acknowledged a period of localized overheating in June, when valuations for some AI hardware companies briefly hit five-year highs, but noted that a subsequent month-long pullback has restored a "reasonable and healthy" balance between share prices and future earnings expectations.

Market data reveals that while Chinese AI companies account for approximately 11% of the global AI market capitalization, overseas funds have allocated only about 1% of their AI portfolios to this region. This indicates that foreign investors remain significantly underweight in Chinese AI equities. Goldman Sachs suggests that China's AI sector does not exhibit an overall bubble and that current valuations do not fully capture the potential economic benefits AI is poised to generate.

China's goals for technological self-reliance and the rapid development of its nationwide computing infrastructure are key factors supporting this structural shift. Strong government backing for AI hardware and infrastructure enables domestic equipment manufacturers to steadily increase their global market share. This reinforces the robustness of China's manufacturing ecosystem and its global competitiveness.

Analysts note that Goldman Sachs maintains an overweight stance on A-shares and remains fundamentally bullish on AI hardware technology in the long term. Looking ahead, AI tokens, which serve as a billing unit for AI computing services, are projected to become a major new growth engine for Chinese exports. The significantly lower per-token cost of domestically developed large AI models in China compared to international competitors is accelerating the commercial adoption of AI agents and industry-specific cloud solutions, potentially reshaping China's trade landscape.