Robots, AI Surge in Spring Festival

In the wake of the recent Spring Festival holiday in China, two significant developments in the realm of technology made headlines, underscoring the nation's advances in artificial intelligence (AI). These advancements not only reflect China's growing influence in the global tech arena but also signal a transformative phase in both hardware and software implementations of AI, which have the potential to redefine industries and enhance everyday life.

On the software front, DeepSeek, a rapidly rising mobile application, has taken the tech world by storm. Since its release, DeepSeek has climbed to the top of download charts in over a hundred countries, marking a substantial increase in China's status in the global AI sector. This surge in popularity is indicative of not just the app's effectiveness but also of a broader acceptance and increasing reliance on AI technologies worldwide.

In contrast, the hardware spotlight was shone on a domestic humanoid robot, festooned in a vibrant red outfit, who took to the stage of the prestigious Spring Festival gala. This delightful performance, showcasing a dance with humans, highlighted the creativity and innovation emerging from Chinese robotics. Such events do more than entertain; they serve as a medium for demonstrating the capabilities of AI-driven machinery, sparking imagination about future interactions between humans and robots.

Both of these developments - one rooted in software and the other in hardware - encapsulate recent breakthroughs in the world of Chinese technology, particularly within AI. These endeavors not only showcase the significant innovation powering Chinese tech firms but also augment the country’s international reputation as a formidable player in the global tech industry.

The financial markets, too, have demonstrated an impressive forward-thinking approach towards lucrative technology sectors. In a decisive step, on July 25, 2024, the China Securities Index Company unveiled the Shanghai Stock Exchange's Sci-Tech Innovation Board AI Index (Index Code: 950180) to provide a gauge of the performance of companies in the AI sector listed on the Sci-Tech Innovation board. Products such as the AI-focused Sci-Tech Innovation ETF (588730) have already started to track this index, emphasizing the relevance and potential of this burgeoning market segment.

Focusing specifically on the chosen companies for this AI index, it reflects a commitment to “self-controllability” and “hard technology.” The index was curated to include 30 major market capitalization companies involved in providing foundational resources for AI, including specialized computing chips and high-performance computers.

Additionally, it emphasizes technological support for AI development, such as cloud computing, big data analytics, machine vision, and speech recognition. The sectors benefiting from these advancements include intelligent security, smart transportation, smart homes, telemedicine, and wearable technology. The index's focus on these core sectors illustrates the intent of advancing substantial technological capabilities within the industry.

In terms of selection methodology, the index prioritizes high-market-cap companies that are uniquely positioned within these segments, demonstrating rigorous criteria to ensure only the most relevant firms make the list. This sharpening focus on emerging technologies reveals the prioritization of investment in firms with robust market potential.

The index stands out in its market representation, showing a significant emphasis on foundational chips and AI applications, with over 55% of its share covering AI applications influenced by the recent surge in application development following the advent of models like DeepSeek.

As for market performance, the Shanghai Stock Exchange Sci-Tech Innovation Board AI Index has shown remarkable resilience. It has provided substantial returns since its establishment, showing considerable adaptability against the backdrop of fluctuating market conditions.

For example, as of February 6, 2025, the index recorded an impressive annualized return of 104.77%, a testament not only to the rapid growth and adoption of AI technologies but also to the robust innovation capabilities among companies listed on the Sci-Tech board.

This performance can also be attributed to the flourishing AI sector, which is opening new avenues for revenue generation and market occupation for firms invested in AI. Scenarios of technological breakthroughs generating expansive market opportunities are not merely speculative but rooted in the inherent growth trajectories of participating companies.

The strength of the constituent companies in terms of innovation and growth further underpins their success, better positioning them to leverage market opportunities effectively. As AI permeates various industries, the ability of firms to continuously introduce innovative products becomes increasingly critical.

Examining projections, the Shanghai Stock Exchange Sci-Tech Innovation Board AI Index reveals promising expectations. According to data available through Wind Information, the index's constituent companies' revenues and profits are anticipated to soar in the upcoming years, signaling an optimistic outlook.

Projected growth rates for revenues and net profits are particularly encouraging, with expected figures of 15% and 27% annual growth, respectively, alongside net profit growth rates of 66% and 36% for 2025 and 2026. Such figures indicate robust profitability and immense growth potential as firms navigate and capitalize on evolving market landscapes.

This trend highlights companies that are not only positioned to endure but also to thrive in a market characterized by consistent demand for advanced AI solutions and services. Continuous efforts in research and development, paired with a resolute drive to expand market presence, will only enhance these companies' competitive standings and growth metrics.

As the global wave of AI technology continues to swell, domestic players like DeepSeek and the humanoid robot are at the forefront of this movement, representing new forces in the AI sector that facilitate industry transformations. The interplay with index ETFs massively enhances investors' opportunities to tap into this technological surge.

Chinese market participants now have access to AI-focused ETFs such as the Sci-Tech Innovation ETF (588730) and the E-Fund Robotics ETF (159530), both tracking significant indices tied to the evolving landscape of AI and robotics. Investing through these ETFs provides a cost-effective gateway for stakeholders to stake their claims in leading firms driving this extraordinary transformation in technology.

Ultimately, the unfolding developments in AI, highlighted through applications like DeepSeek and innovative robotic performances, herald a future intertwined with technological intelligence and human interaction. As investments flow into these sectors, the stage is set not only for corporate growth but also for a sweeping change in how society interfaces with technology.