This year's hottest AI market: US stocks have soared, why is Hong Kong stock market not performing well? When will the opportunity come?

Since the beginning of the year, the US stock market has sparked an investment frenzy in artificial intelligence (AI), which has also spread to the A-share market, but the Hong Kong stock market has responded tepidly. What are the reasons behind the differences in AI market trends between overseas and domestic markets?

According to Xun Yugeng, an analyst at Haitong Securities, the main reason is that the current AI technology in China has not directly boosted corporate profits, while Hong Kong stock investors are more concerned about fundamentals.

So, can the Hong Kong stock market benefit from the development of the AI industry?

The aforementioned analyst believes that as Chinese AI technology gradually matures and translates into definite profits, the Hong Kong stock market is still expected to benefit from the AI industry in the future!

Market Review

The emergence of ChatGPT this year has led the wave of artificial intelligence. Since the beginning of the year, the Nasdaq Composite Index has risen by 30%, the S&P 500 has risen by 15%, and the S&P 500 (excluding tech stocks) has fallen by 1%, indicating that the overall gains in the S&P 500 in the first half of the year were mainly contributed by the tech sector.

At the same time, representative companies in various AI industry chains in the US stock market have also seen significant increases. For example, NVIDIA, a leading AI chip company, has risen by 190%, Meta, the developer of the large language model LLaMA, has risen by 138%, and Microsoft, the parent company of ChatGPT, which was acquired, has risen by 43%.

However, in this round of AI market trends, the participation of the Hong Kong stock market has been relatively low. The Hang Seng TECH Index has fallen by 8% since the beginning of the year, while the Hong Kong Internet Index has risen by 6%.

In terms of individual stocks, although many technology companies listed in Hong Kong have successively released large AI models and related application products, their stock prices have shown a relatively flat response, or even a slight decline. For example, Alibaba, which launched the Tongyi large model, has fallen by 6% since the beginning of the year, and SenseTime, which launched the "RiRiXin SenseNova" large model, has fallen by 7%.

Why the Difference?

According to the analysis by Haitong Securities, the sharp rise in the US stock market's AI sector is due to its technological leadership, while the Hong Kong stock market is relatively rational.

The outstanding performance of AI-related companies in the US stock market is mainly due to their leading position in AI large model technology and applications.

Mature AI companies in the US have already built a large user base and explored profitable models for AI large models. Take ChatGPT as an example, the number of monthly active users reached 100 million after 60 days of its launch, and in February, OpenAI officially launched the subscription service for the paid version of ChatGPT, gradually achieving commercialization.

At the same time, the AI hardware industry in the United States is well-developed and occupies a dominant position in the global supply chain. Taking NVIDIA, the leading chip company, as an example, according to TrendForce, NVIDIA's market share in global GPU chip shipments will exceed 60% in 2023. Therefore, the AI market in the US is mainly based on the application of AI technology, which has brought about the growth of company fundamentals and provided support for the market.

In contrast, the development of AI companies in the Hong Kong stock market is not mature, and Hong Kong investors are more rational.

The AI companies listed in Hong Kong are mainly domestic internet giants, who have already made progress in the field of AIGC and have successively launched self-developed AI models, actively exploring the integration of application ecosystems.

However, overall, the AI models of internet companies listed in Hong Kong are still in the early stages and it is difficult for them to generate profits. Since Hong Kong's stock market is mainly dominated by overseas institutional investors who focus more on fundamentals, they rarely participate in AI-themed markets in advance.

Why is there still hope for the Hong Kong stock market?

Haitong Securities believes that, in terms of the Hong Kong stock market, internet companies have natural advantages in developing AI models in terms of training data and application ecosystems.

On the one hand, China has a large number of internet users: according to statistics from Wind, the number of Chinese internet users has exceeded 1 billion by 2021, forming a natural traffic dividend and providing a huge amount of training data for the development of AI models. On the other hand, Chinese internet giants have already established relatively complete application ecosystems. The continuous enrichment of AI model functions is expected to empower downstream application scenarios of enterprises. For example, in April, Alibaba CEO Zhang Yong announced at the Alibaba Cloud Summit that all Alibaba products will be integrated with the "Tongyi Qianwen" large model for comprehensive upgrades.

In summary, as China's AI industry construction gradually improves and technology continues to iterate and upgrade, if internet companies successfully promote the landing and application of AI models, truly transforming AI technology into deterministic profitability, it is expected to drive the improvement of company fundamentals and stimulate the AI industry market in the Hong Kong stock market.