Goldman Sachs Downgrades H-Shares, Shifts Overweight to A-Shares with Bet on Mainland AI Hardware Sector
Claire Weston
Goldman Sachs cut H-shares from overweight to market-weight while keeping A-shares overweight and raising the CSI 300 target to 5,500 — the thesis is that China's AI returns are shifting from Hong Kong-listed internet names to A-share hardware plays.
What exactly did Goldman change?
Goldman downgraded H-shares from overweight to market-weight and kept A-shares at overweight.
The 12-month CSI 300 target was raised from 5,300 to 5,500, implying roughly 12% upside from the latest close.
This means → Goldman is moving regional chips from Hong Kong to the mainland, betting A-shares will outperform H-shares over the next year.
Why does Goldman prefer A-shares over H-shares?
Since the DeepSeek moment in January 2025, China's AI equity rally has added about $3.8 trillion — and 85% of that was driven by AI hardware.
Hardware companies list mainly on the A-share market; internet giants cluster in Hong Kong — so the two markets have traced very different curves.
In plain terms = more than four-fifths of the AI rally money went to chipmakers and equipment firms, and nearly all of them trade on mainland exchanges.
How wide is the gap between Hong Kong and A-shares?
Year to date, the Hang Seng is up roughly 1.5% while the CSI 300 is up over 6%; the tech divergence is even sharper.
The Hang Seng Tech Index has fallen more than 5.5% this year, while the ChiNext — China's Nasdaq equivalent — has risen over 25%.
Goldman analyst Kinger Lau noted that hard-tech stocks delivered strong revenue and profit growth, but major internet companies continue to struggle with net-profit growth.
Where are IPOs heading, and what does that signal?
The vast majority of China's AI semiconductor firms and their suppliers are listed on mainland exchanges; high-profile chip and humanoid-robot IPOs have chosen A-shares over Hong Kong.
Some Hong Kong-listed AI-model companies are now planning secondary listings on the A-share market, concentrating both capital and targets on the mainland.
This reflects a structural shift: A-shares are becoming the home court for China's AI hardware, and IPO direction is the most direct indicator of capital flow.
How are global investors positioned?
Kinger Lau pointed out that China accounts for at least 10% of global AI-related market cap, yet Chinese AI stocks are significantly underweight among international investors.
This means → even a modest rebalancing of global AI allocations toward China could drive substantial inflows into A-share hardware names.
The MSCI China index — heavily weighted toward H-shares — still offers about 11% potential upside over 12 months, but Goldman sees that as no longer standout in a regional comparison.
Content is for reference only, not financial advice.