Goldman Sachs has increased its target for the MSCI China Index, citing the rapid growth of Chinese artificial intelligence (AI) technologies, particularly the newly launched DeepSeek-R1 model. The bank sees AI as a key driver of economic growth, corporate profits, and investor sentiment in China.
AI Boom Drives China Tech Rally
The launch of DeepSeek-R1 has fueled a 27% rally in the Hang Seng TECH Index and a 19% surge in the MSCI China Index over the past month.
Since ChatGPT’s debut in 2022, AI-driven optimism has added $13 trillion to U.S. market capitalization, and China is now seeing similar investor enthusiasm.
Goldman Sachs’ AI-Driven Forecasts
AI adoption could increase China’s earnings per share (EPS) by 2.5% annually over the next decade.
Goldman estimates that improved growth prospects and investor confidence could boost China’s equity valuations by 15-20%, leading to potential $200 billion in portfolio inflows.
Revised Index Targets:
MSCI China: New target 85 (16% upside).
CSI 300: New target 4,700 (19% upside).
AI Investment Landscape in China
Goldman Sachs has categorized China’s AI ecosystem into six thematic groups:
Semiconductors (Semi) – AI chip development & processing power.
Power & Infrastructure – Energy solutions for AI computing.
Data & Cloud – Cloud storage & big data solutions.
Software & Applications – AI-driven software innovations.
Revenue Growers – Companies leveraging AI for top-line growth.
Productivity Gainers – Businesses integrating AI for efficiency gains.
Policy Support Still Needed
While AI presents long-term growth opportunities, Goldman Sachs stresses that policy stimulus remains essential to sustain China’s economic recovery. Government support in fiscal spending, regulatory easing, and investment incentives will be crucial for AI-driven equity growth.
Final Thoughts
Goldman Sachs’ AI-driven optimism signals China’s emerging dominance in AI innovation, attracting global investors. However, macroeconomic policies will play a crucial role in sustaining market momentum and long-term growth.
