China’s AI Investment Pivot: From High-Flying Chips to Hard Assets
China’s AI boom is entering a new phase — and this time, the smart money isn’t chasing chips or chatbot startups. It’s flowing into something far more fundamental: the metals and power systems that keep the entire AI ecosystem running.
As worries grow over frothy valuations in China’s tech sector, investors are quietly repositioning toward the physical backbone that makes artificial intelligence possible. And the implications could reshape the next decade of China’s industrial strategy.
Why Investors Are Moving From “Brain” to “Body” of AI
A new Bloomberg report shows a decisive shift: instead of piling into semiconductor and pure AI companies, Chinese investors are increasingly betting on utilities, power equipment makers, and producers of critical metals like copper and aluminum.
This rotation isn’t random — it’s strategic:
- AI stock prices are overheating, heightening fears of a bubble.
- Data center demand for power and materials is exploding, creating new winners outside traditional tech.
- Infrastructure players offer a more grounded way to ride the AI wave, especially as valuations remain relatively reasonable.
This shift is already reflected in the markets. An index of Chinese energy companies surged roughly 10% in October, outperforming major benchmarks such as the CSI 300.
Where the New AI Money Is Going
China’s next AI beneficiaries may not be writing code — they’re building the infrastructure that AI physically needs.
1. Power & Utilities
Data centers consume massive electricity. Investors are snapping up shares in companies that generate, distribute, and stabilize the nation’s grid.
2. AI Metals: Copper & Aluminum
AI requires servers. Servers require cooling systems. Both require metals. BofA forecasts ~20% annual growth in copper demand from Chinese data centers through 2030.
3. Energy Storage & Backup Systems
Reliability is now a competitive advantage. Battery producers and energy storage providers are gaining attention as data centers demand uninterrupted power.
4. Optical Networking Hardware
AI models need to move data at hyperscale. Companies producing optical fibers and transceivers are becoming critical to China’s computing buildout.
Why China Is Positioned to Win This Infrastructure Race
Analysts argue that China has unique advantages as it doubles down on AI infrastructure:
- Lower energy costs and huge generation capacity
- Fast buildout of renewables and supportive government policy
- Economies of scale that the U.S. and Europe can’t easily match
BofA estimates that over one-third of China’s AI spending by 2030 will go toward physical infrastructure — not just chips or algorithms.
If the first wave of AI investment was about compute power, the next wave may be about the power behind the compute.
Risks: Not All That Glitters Is Copper
Infrastructure may be hot, but it isn’t risk-free:
- Policy risks remain significant in a heavily regulated sector.
- Competition is fierce, especially in power equipment and metals.
- Long investment cycles mean returns may take time to materialize.
Still, for investors wary of tech bubbles, the physical layer of AI offers a more tangible — and arguably more durable — growth story.
The Bottom Line: A More Mature AI Thesis
China’s new investment trend signals a more grounded understanding of AI’s long-term economics. The next big winners may not build models, chips, or chatbots — they’ll power the data centers, mine the metals, and build the networks AI depends on.
In other words: the future of AI may be written in code, but it’s built in copper.
Glossary
- Pure-play AI stocks: Companies whose core business is AI (e.g., chips, software, LLM firms).
- CSI 300 Index: A benchmark of 300 major companies across Shanghai and Shenzhen exchanges.
- Data center infrastructure: Physical systems required to operate large-scale computing facilities (power, metals, cooling, networking).
Source: Bloomberg – “China’s AI Bets Pivot to Power, Metals as Tech Bubble Fears Grow” https://www.bloomberg.com/news/articles/2025-11-15/china-s-ai-bets-pivot-to-power-metals-as-tech-bubble-fears-grow
