Chinese Artificial Intelligence: 3
Stocks on the Move

Chinese companies are making huge strides in the global artificial intelligence (AI) race today, establishing themselves as formidable competitors to their Western counterparts. Fueled by significant government support, access to massive data sets, and a deep talent pool, these companies are not just catching up in AI but often gaining an edge.

For investors who are looking to capitalize on the AI boom, there could be an opportunity in China given the rapid pace of innovation and immense scale of the market. Here’s a look at three Chinese stocks that are on the move as a result of exciting AI developments.

Baidu is Transitioning from Internet Search to AI

Shares in Baidu (7.88%*), which is often called the “Google of China” due to its dominant position in the Chinese search engine market, have experienced a sharp move higher recently. This strength has been driven by several major developments in the AI space as well as some bullish analyst coverage.

At Baidu’s WAVE SUMMIT 2025 developer conference on September 9, the company unveiled its latest reasoning model, Ernie X 1.1. This is an extremely powerful AI model; in testing it performed on par with top-tier models such as GPT-5 and Gemini 2.5 Pro while outperforming DeepSeek’s latest reasoning model (the R1-0528), according to the company¹. Also released at the event was Baidu Comate 3.5S, a major upgrade to its AI coding assistant. Another powerful AI tool, this features enhanced multi-agent-collaboration capabilities, enabling a single developer to achieve the productivity and efficiency of an entire team.

Shortly after this, on September 15, Baidu announced that it had secured a major AI-related deal with state-owned enterprise China Merchants Group (CMG). In a statement, Baidu said that the focus of this deal will be on applications of large language models (LLMs), AI agents, and digital employees, and that the two companies hope to make scalable and sustainable progress in industrial intelligence. Note that CMG, which is directly supervised by the Chinese government, is one of the oldest and most influential companies in China. It operates a diverse business portfolio with three main pillars - transportation and logistics, finance, and urban development.

Around this time, it was also reported that Baidu has started using internally-designed chips for AI. This news originated from a report by The Information, which cited sources with direct knowledge of the matter, and was quickly picked up by other news outlets. The chip that Baidu has reportedly been using is the Kunlun P800. Specifically designed to handle AI tasks, it is an in-house alternative to Nvidia’s GPUs.

On the back of all this, analysts at equity research firm Arete Research Services lifted their rating on Baidu’s ADRs to buy from sell, based on a positive outlook for its AI solutions². This gave the stock a major boost, sending it up more than 10% in a single day.

Xiaomi is Integrating Generative AI into Cars and Homes

Xiaomi (6.17%*) is best known for its smartphones and electric vehicles. However, recently, the company has been making strategic moves in the AI space with the goal of building a comprehensive "Human x Car x Home" smart ecosystem.

In April, the company unveiled a new AI reasoning model called MiMO, showing its ambition to integrate generative AI into its hardware. An open-source model, this has seven billion parameters and outperformed OpenAI’s o1-mini and Alibaba’s QwQ-32B-Preview in math reasoning and coding, according to the company³.

More recently, in August, the company released MiDashengLM-7B, an open-source AI voice model. Designed to be a commercially viable alternative to proprietary systems from companies like OpenAI and Anthropic, this can understand speech, environmental sounds, and music, and has already been put to use in smart home devices and vehicles from the company.

Thanks to these powerful new products, Xiaomi is quickly becoming a key player in the Chinese AI space. Looking ahead, analysts expect to see further investments in artificial intelligence with a focus on vehicle and smart home integration.

Cambricon Technologies is Known as “China’s Little Nvidia”

While all eyes were on Nvidia’s earnings in late August, there was another AI chip company that produced a very strong earnings report around then and that was Cambricon Technologies (6.46%*). Sometimes called “China’s Little Nvidia," it’s a partially-state-owned company that has developed a full-stack AI chip ecosystem that includes everything from chips for large-scale training to a software platform to support its chips. Its core offering is the MLU (Machine Learning Units) product line, which is designed to support both training and inference tasks in AI workloads. Its software platform, known as Cambricon Neuware, is essentially an answer to Nvidia’s CUDA.

For the second quarter of 2025, Cambricon’s revenue came in at RMB 2.88 billion (approx. $403 million), an increase of more than 4,000% year on year⁴. Net profit for the period was RMB 1.04 billion, a vast improvement on the RMB 530 million loss it posted a year earlier. As a result of this impressive performance, the company’s share price surged more than 15% to a record high. Recently, it has given back some of these gains but still remains up by over 100% year to date.

Now, this company’s revenue is tiny compared to that of Nvidia. For reference, Nvidia posted revenue of $46.7 billion for the second quarter of 2025 - more than 100 times that of Cambricon. However, the huge level of top-line growth here can’t be ignored. Ultimately, it underscores how local challengers to Nvidia are growing rapidly as Beijing moves to bolster its domestic chip industry.

*Weighting in the Themes China Generative Artificial Intelligence ETF, as of September 19, 2025

Footnotes:

¹PR Newswire, Baidu Unveils Reasoning Model ERNIE X1.1 with Upgrades in Key Capabilities, as of September 9, 2025

²CNBC, China’s Baidu soars 16% to hit 2-year highs amid positive signs for its AI business, as of September 16, 2025

³Tech in Asia, Xiaomi debuts MiMo, an open-source reasoning AI model, as of April 30, 2025

⁴CNBC, China Nvidia rival Cambricon adds to $40 billion rally with 4,000% revenue jump, as of August 27, 2025