Artificial intelligence related stocks have been on a tear since the start of the year, partly due to a surge in interest in chatbots. Since its introduction last year, ChatGPT has gained over 100 million users , prompting increased investment in cutting-edge AI technologies. For example, the Global X Robotics & Artificial Intelligence ETF has risen by 22% and attracted $142 million in fund flows this year. The fund now holds more than $2 billion worth of assets, according to FactSet data. However, for investors who might have missed that run-up in such stocks, HSBC has identified four Chinese stocks that are still set to benefit from the growing trend. The bank believes that demand for training these artificial intelligence systems will be the critical driver for A.I. investment in China this year, with growth momentum shifting toward bots specializing in prediction and forecasting from next year onward. The table below shows four stocks, all of which are specialist hardware manufacturers targeting AI systems, HSBC is bullish toward: The bank’s positive outlook on A.I. spending is driven by the rapid development of large language models (LLM) — the system behind OpenAI’s ChatGPT. According to HSBC, more than 30 companies and institutes in China are currently developing LLMs and foundation models, indicating strong demand for A.I. servers and increased spending on networking infrastructure. As a result, computing power demand is expected to grow exponentially over the coming years as LLMs become more prevalent. HSBC said the previous generation of technology in ChatGPT required at least 1,000 Nvidia A100 graphics processing units (GPUs), which cost $10,000 a piece , running 23 days non-stop to train and prepare the A.I. system. Larger A.I. systems with more demanding needs are being developed, which could lead to more than 40% year-on-year growth for GPU chips in China this year, HSBC has predicted. The bank is bullish on Foxconn Industrial Internet, or FII, due to its exposure to Microsoft , a core investor and the server infrastructure provider of ChatGPT. “We also expect strong A.I. server orders to be placed at FII, which will help to expand Microsoft’s computing capacity,” wrote HSBC analysts Frank He and Steven Wang in a note to clients on Apr. 20. The bank said FII’s A.I. server-related sales would rise 118% in 2023, which follows the 100% growth already achieved in 2022. According to the Asia-focused investment bank, there are significant opportunities within hardware supply chains and software providers when investing in new developments within A.I. Other stocks HSBC highlighted include A.I. hardware supply chain companies Inspur , Unisplendour , and Shengyi Technology . — CNBC’s Michael Bloom contributed to this report.
