A new report from VanEck has reinforced the opportunity for investors lying within China's artificial intelligence growth.
According to the report, global semiconductor stocks have surged back to life.
The Philadelphia Semiconductor Index (SOX) recently recorded its longest winning streak in more than three decades: 18 straight positive sessions as at 24 April 2026, representing a gain of 47.2% from 30 March to 24 April 2026.
And while this rally has been front and centre, a similar story is unfolding in China that we believe many investors have not yet fully appreciated.
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China's AI ecosystem developing rapidly
According to VanEck, DeepSeek, the Hangzhou-based lab whose open-source AI model rivalled OpenAI's ChatGPT, is now in discussions to raise capital at a valuation of more than US$20 billion.
While significant, this figure represents a fraction of OpenAI's current US$852 billion.
Alibaba has set a target of increasing annual cloud and AI revenue fivefold to US$100 billion within five years, while Tencent has unveiled a major upgrade to its foundational open-source AI model.
Together, the developments suggest China's AI champions are moving rapidly toward large scale commercial competition.
Beyond the megacaps
VanEck also pointed out that when investors think about China's AI story, mega caps including Alibaba Group (NYSE: BABA) and Tencent (SEHK: 700) come to mind first.
While these are important companies, they represent only one part of a much deeper ecosystem.
More important, however, are the companies that form the physical backbone of the AI infrastructure build out. These are the manufacturers of optical transceivers that connect AI server clusters, the producers of high-density printed circuit boards (PCBs) and semiconductor materials that underpin chip fabrication, as well as the makers of Internet of Things (IoT) devices that bring AI capabilities into the physical world.
Attractive valuations
Another important aspect of the Chinese AI boom is China's AI-linked companies are attractively valued compared with their US counterparts.
In the US, AI beneficiaries command eye-watering multiples, with many software companies trading at well above 100x like Palantir (107.9x) and Cloudfare (184.5x) at the time of writing. In contrast, critical AI supply chain companies listed in China are available at 20–35x forward earnings while consumer companies integrating AI into their products trade for as little as 8–15x, according to Bloomberg consensus estimates.
How to target China's AI boom
For investors looking to capture exposure to this rapidly growing sector, there are several ASX ETFs to consider.
Some options include:
- VanEck China New Economy ETF (ASX: CNEW) – Invests in 120 fundamentally sound and attractively valued companies with growth prospects in China's New Economy, targeting technology, healthcare, and consumer staples and consumer discretionary sectors. More than 20% of CNEW's exposure is toward companies that work in either technology hardware or semiconductor production.
- VanEck Ftse China A50 ETF (ASX: CETF) – Invests in a diversified portfolio comprising the 50 largest companies in the mainland (A-shares) Chinese market. More than 20% of CETF's exposure is toward technology companies.
