Billy Duberstein, The Motley Fool
6 min read
In This Article:
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While restricted from the latest and greatest chips for now, over half the world's AI researchers are in China.
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As such, growth investors should try to have some China-related AI exposure in their portfolios.
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Here's how a South African stock may offer the best way to play Chinese AI.
Would you believe that the best way to play China's AI ambitions may be a South African stock?
Artificial intelligence has the potential to change the economy. As such, investors should have exposure to some AI companies in their portfolios -- and that includes Chinese exposure. Even Nvidia CEO Jensen Huang recently noted that China is home to half of the world's AI researchers. And the January unveiling of the groundbreaking DeepSeek R1 model showed how China is able to innovate cutting-edge AI, even with limited silicon access.
Nevertheless, investing in China carries risks pertaining to its economy, its government, and the market mechanics of owning Chinese stocks. That's why the best way to expose oneself to Chinese AI may be South African holding company Naspers (OTC: NPSNY).
It's still very early in the AI races, and in truth, it's hard to know who is going to win out. It could be an upstart AI lab such as DeepSeek in China or OpenAI in the U.S., or one of the existing big tech giants.
In this investor's opinion, the existing incumbents are the best bet. These companies have huge technological and financial resources to invest in AI, and AI should also enable existing large businesses to boost revenue and lower costs through better automation and data science.
That's why Tencent (OTC: TCEHY) seems like good bet to be a big winner from Chinese AI. Tencent has the largest social media platform in China in WeChat, with more than 1.4 billion users. It's also the largest video game publisher in the China, the largest video and music streaming company, one of the two large digital payments companies, and one of China's cloud computing giants.
In addition, Tencent is building its own large model, called Hunyuan, which could lead to vast new AI opportunities if it ends being more performant than DeepSeek and other competitors over time.
Tencent stock doesn't trade on U.S. stock exchanges, but it does trade over the counter as an American depositary receipt. However, a better way to play Tencent may be through its largest shareholder, European-domiciled Prosus (OTC: PROSY), which owns more than 23% of Tencent's stock. And the best way to invest in Prosus may be in its largest shareholder, Naspers, which owns 43% of Prosus.
