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UBS analysts are turning increasingly bullish on Chinese technology stocks, raising portfolio allocations after a recent sector pullback. The brokerage believes strong earnings, attractive valuations, and accelerating artificial intelligence (AI) innovation will position China’s tech sector for solid returns in 2026.
Chinese tech shares listed in Hong Kong have fallen roughly 20% from their October highs, weighed down by concerns over excessive AI-related spending in the United States and fears that advanced AI tools could disrupt traditional software models. Sentiment was further pressured after Anthropic unveiled new AI products, raising questions about competitive intensity. However, UBS sees the correction as a buying opportunity rather than a long-term threat.
According to UBS, Chinese tech giants currently spend only a fraction of what their U.S. counterparts allocate to capital expenditure. The bank expects local hyperscalers to announce expanded investment plans in the upcoming earnings season, driven by AI infrastructure, cloud computing, and next-generation model development. Unlike in the U.S., where investors have recently punished aggressive capex growth, UBS believes Chinese markets are still rewarding companies that invest heavily in future expansion.
The firm increased its weighting in Tencent Holdings by three percentage points and added one percentage point each to Bilibili, Kanzhun, Meituan, NetEase, and TAL Education Group. Meanwhile, it reduced exposure to Vipshop and New Oriental Education, with smaller trims to Alibaba, Kuaishou, and Xiaomi.
UBS also expressed optimism about China’s gaming sector despite concerns following Google’s Project Genie launch. Analysts argue that established gaming companies retain key advantages, including strong intellectual property portfolios, deep user insights, and operational scale. Rather than being disrupted by AI, leading developers are expected to leverage artificial intelligence to enhance gameplay, improve monetization, and accelerate content creation.
In addition, emerging AI startups such as Zhipu, MiniMax, and Deepseek continue to release advanced foundation models, reinforcing confidence in China’s long-term AI growth story. UBS expects more powerful AI models and innovative applications to emerge in 2026, supporting sustained momentum in Chinese technology stocks.
