BlackRock advised investors to focus on specific AI stocks in China rather than the entire region

BlackRock, the world's largest asset manager, is not betting broadly on China's AI sector, preferring instead to select stocks of potential beneficiaries on a case-by-case basis. BlackRock’s research arm, the BlackRock Investment Institute, confirmed its neutral view on Chinese stocks and expressed a preference for U.S. stocks in a note, according to CNBC.

“China has advantages in certain segments of this value chain—specifically, in industrial manufacturing and batteries. But a strong manufacturing position alone does not guarantee attractive stock returns, and this only reinforces our commitment to active management rather than broad bets on the region (passive investment in stock indices — Oninvest),” said BlackRock, which manages $14 trillion in assets (as quoted by CNBC).

Against the backdrop of U.S. restrictions on the supply of advanced technologies, Beijing has launched measures to support its AI industry. But it is by no means certain that Chinese companies will be able to profit from this amid slowing economic growth and fierce competition, according to BlackRock. “Low-cost, open-source AI may spur the adoption of the technology, but that does not necessarily translate into profitability for its providers,” the company suggested.

BlackRock analysts “see [investment] opportunities in physical AI”—where the technology is embedded in equipment, such as robots. The investment giant’s selective approach to Chinese stocks runs counter to expectations that the rapid growth of the stock markets in South Korea and Taiwan—where local chipmakers set the tone—will spill over into the Chinese market, CNBC notes.

BlackRock considers stocks of companies tied to scarce resources in the AI sector to be attractive—for example, those related to infrastructure, from China to Latin America.

But BlackRock’s top pick remains the United States: “It’s not easy to identify the ultimate beneficiaries in the AI sector, but we believe that many of them will be in the U.S.—thanks to the country’s leadership in chip development, cutting-edge AI models, and the depth of its capital markets,” CNBC reports, citing the memo.

According to WhaleWisdom, the top ten holdings in the publicly disclosed portion of BlackRock’s portfolio are dominated by shares of the “Magnificent Seven” U.S. tech giants: Nvidia (5.9% of the portfolio), Apple (5.1%), Alphabet (4.1%), Microsoft (3.8%), Amazon (2.7%), Meta Platforms (1.7%), and Tesla (1.35%). The top 10 also includes shares of Broadcom, a supplier of chips and data center equipment (2.2% of the portfolio), Wall Street’s largest bank, JPMorgan Chase, and pharmaceutical giant Eli Lilly (both at 1.1%).

This article was AI-translated and verified by a human editor