Amid a space race with artificial intelligence, the construction of cutting-edge data centers in China highlights a nation gearing up to dominate the market. But what does this mean for the Asian power’s purely AI actions?
Bloomberg reported on an ambitious AI data center strategy planned in Beijing, which would see around 2 trillion yuan ($295 billion) allocated to building national infrastructure over the next five years. Led by the National Development and Reform Commission, the project is expected to link the country’s IT facilities into an integrated network.
Importantly, the plans will largely focus on leveraging local suppliers to provide the required technology, opening the door to entirely new growth opportunities for China’s artificial intelligence leaders. This could have a lasting impact on domestic technology stocks.
The initiative would rely heavily on China Mobile and China Telecom, both of which would take primary responsibility for operating the facilities and maintaining connectivity between them.
Beyond that, at least 80% of the hardware and software, including AI chips, that will be used in the data centers will come from Chinese suppliers, and private companies like Huawei Technologies are expected to become one of the main beneficiaries of the project. That would leave global AI giants like Nvidia and Advanced Micro Devices (AMD) out of the picture.
Chinese AI companies have gained momentum in recent months. Z.ai’s GLM-5.2 open source model launch won global attention for its agentic abilities comparable to those of Anthropic’s Opus4.8. As a result, there has been much discussion about how quickly China is catching up with its resource-rich American counterparts in the AI race. Many analysts view China’s rise in AI as a question of “when” rather than “if.”
The launch of Beijing’s ambitious data center projects may also become a historic moment as Chinese AI stocks seek to close the gap from skyrocketing high-tech valuations on Wall Street.
“Zhipu is an example of one of the most high-potential Chinese AI stocks, having recently surpassed HK$1 trillion in value on the Hong Kong Stock Exchange, or around $128 billion,” noted Vsevolod Smirnov, head of marketing at Juste2Trade. “The problem is that the stock is still only a fraction of the value of U.S. AI leaders like Nvidia and Alphabet, both of which operate with market capitalizations above $4 trillion.”
“It is through government AI infrastructure projects that China’s AI leaders will finally be able to catch up with the skyrocketing cash flows of their U.S. rivals and match their spending.”
What actions could benefit from it? China’s newest collection of “AI tigers” may be the clearest beneficiary of a growing national infrastructure.
Zhipu’s momentum shows that an improving outlook for Chinese AI can help boost investor confidence. During its first reporting quarter, the agentic artificial intelligence leader recorded a 131.9% year-over-year increase in revenue, posting annual revenue earnings of 724.33 million yuan ($104.8 million).
Citi analysts expect the beneficiaries of China’s spending on AI infrastructure to be numerous. Two actions were highlighted For their proximity to the data center construction project, GDS Holdings and Vnet Group – both data center infrastructure providers – will likely be well positioned for continued growth. Both companies are already recording high volumes of new bookings, 200 MW in the case of GDS and over 500 MW for Vnet.
Inventories should benefit from growing demand in the long term. After all, AI appears to be omnipresent in China’s plans for the future. In the updated plan for the nation last five-year planthe term “AI” was mentioned more than 50 times over 141 pages, as well as an extensive “AI+ action plan”.
With this in mind, we are poised to see impacts that will scale across different sectors at scale, creating opportunities for AI-focused beneficiaries across sectors. For example, building a data center will require huge investments in China’s power and energy sector. Between necessary upgrades to the nationwide power grid, IT and communications, the total cost of Beijing’s data center project could reach 5 trillion yuan ($735 billion).
Evidence points to a prosperous era for Chinese AI stocks, with data center infrastructure projects expected to support the country’s innovators as the AI gap continues to close compared to its U.S. rivals.
Investors should, however, prepare for some volatility. In recent days, a period of profit-taking in Asian technology markets has led to steep losses for indices like South Korea’s Kospi, which fell 8 percent.
The task of catching up with the US AI giant will be far from easy, but China’s $295 billion AI infrastructure projects represent the cornerstone that can help more industrial stocks realize their potential.