UBS: China AI Tech Stock Valuations Near Historic Lows, Risk-Reward Turning Favorable
nashnova research
China's AI tech hardware stocks are up just 9% year-to-date, with valuations near historic lows; UBS says the market has overpriced AI fundamental risks and the risk-reward profile is turning favorable again.
How cheap have these stocks gotten?
UBS's AI tech hardware tracker is up only 9% YTD; net positioning has fallen back to start-of-year levels.
Current valuations imply 2027 earnings growth slowing by 50–60%, with 20–30% downside to consensus estimates.
This means → the market has already priced in most of the "AI won't make money" bear case.
Compared with the 2018 trade-war trough, these stocks trade just 25% above that low — and back then, the AI investment theme did not yet exist.
What happened after past sell-offs this deep?
UBS cites historical data: after hitting valuation troughs in 2018 and 2022, these AI tech stocks rallied an average of over 50% in the following 12 months.
In plain terms = every time the market has beaten these stocks down to extreme cheapness, a sizable rebound followed within a year.
Fundamentals remain intact: despite component shortages over the past three months, earnings forecasts for most AI tech names have been revised up 12–15%.
Who has sold — and who hasn't left yet?
Hedge funds have sharply cut AI tech hardware positions; net exposure is back to start-of-year levels. A-share margin balances have also dropped below January marks.
Short selling on Hong Kong-listed stocks is near historic highs, and rising further on some hardware names.
Yet UBS tracking shows long-only overseas funds may not have de-risked to the same degree — their positioning remains elevated relative to history.
This means → fast money has already exited, but patient capital hasn't fully unwound, leaving residual selling pressure ahead.
Is the broader China market actually cheap?
The MSCI China Index — the main international benchmark for Chinese equities — trades at a forward P/E of 9.5×, 1.2 standard deviations below its historical mean and at the 8th percentile of its history.
In plain terms = only 8% of the time has the market been cheaper than it is now — valuations are at an extreme low.
But UBS also flags headwinds: a stronger renminbi pressures export earnings, and rising input costs continue to weigh on domestic consumption, capping earnings upside.
What does UBS recommend?
UBS favors a barbell strategy: AI tech hardware on one end, bank stocks on the other.
Top tech picks are NAURA, CXMT, and SMIC — all upstream equipment and manufacturing plays in the AI hardware chain.
This reflects UBS's core call: AI fundamentals are not broken, but whether a near-term rally can sustain depends on how quickly long-only overseas funds continue to de-risk.
市场有风险，内容仅供研究参考，不构成投资建议。