UBS:Progress made in China on the commercialization of AI, and acceleration in the localization of chip production.

In an online briefing, Li Zhiying, the stock manager of the office of the Chief Investment Officer of UBS Wealth Management in Greater China, stated that there are two bright spots in the development of AI in China: significant progress in AI monetization and accelerating localization of chip production. Li Zhiying pointed out that some Chinese internet companies have made breakthroughs in AI monetization. For example, a gaming company has significantly increased its advertising click-through rate from 1% to 2-3% by using AI to customize content and short videos, leading to a 20% growth in advertising revenue. In the field of chips, Li Zhiying noted that with external supply restrictions, the localization process of AI chips in mainland China is accelerating. She stated that China can now rely on domestic chips for inference, but still needs to rely on imports for training. Regarding investment opportunities in the Chinese AI market, Li Zhiying believes that the valuation of related stocks is still attractive. She mentioned that the Hang Seng Tech Index currently has a P/E ratio of around 17 times, and the expected earnings growth rate of component stocks of the index over the next three years could reach 20%-25%, demonstrating good investment value.