- CLSA gives three stocks to bet on China in the global AI race

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These three stocks stand to benefit from the future explosion of artificial intelligence in China, CLSA says.

CLSA thinks China could emerge as the second-largest artificial intelligence market, and the firm is eyeing a tranche of stocks to play the growth. In a Tuesday research note, CLSA analysts led by managing director Elinor Leung noted the emergence of a "global AI race with lucrative potential" that has yet to fully play out in China. The U.S. has so far been the dominant market for AI. The explosion of investor excitement over AI in the U.S.

mountain Baidu stock has added nearly 25% from the start of the year. "We believe Baidu, Alibaba and Tencent are the best positioned to lead China's AI innovation," Leung said. "They are the cheapest AI plays worldwide in terms of valuation." All three companies are the dominant developers of large language models in China, Leung added, and already have a tight grip over the necessary data and IT to grow further.

mountain Alibaba stock has added 7.4% from the start of the year. Tencent is a standout, given that the company could stand to benefit the most from China's recovery from macro-driven headwinds which will delay information technology [IT] spending, Leung added. As the sector grows, she said, "BAT Cloud could resume more than 20% annual growth after repositioning away from low-margin and highly customized projects." 700-HK YTD mountain Tencent stock.

 

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