Perhaps the largest end result of the newest U.S.-China commerce talks is China’s elevated confidence in its homegrown expertise. Alibaba and Baidu each noticed their shares surge this previous week after information of AI advances and enterprise offers . Huawei touted AI chip techniques higher than Nvidia’s concurrently Beijing prolonged a probe into the U.S. chipmaker. Chinese regulators at the moment are discouraging home tech giants from shopping for Nvidia chips, the Financial Times reported, citing unnamed sources. “It’s unlikely that Chinese firms can decide to utterly eliminate overseas chips, for now,” said Brian Tycangco, analyst at Stansberry Research. “But information popping out of China like this isn’t coincidental. It’s meant to ship a message and, probably, weaken President Trump’s hand in commerce warfare negotiations.” “For the time being, the secure play is to stay with the large names within the trade, resembling SMIC, Alibaba and Baidu,” the analyst said. “We haven’t any manner of telling the place the commerce warfare will ultimately find yourself. China’s chip ecosystem is rising quick, but additionally entails a major danger for smaller gamers with restricted entry to capital.” Surviving Nvidia restrictions Major Chinese AI players appear to have survived U.S. restrictions on Nvidia so far. Bernstein analysts said in a note Friday that they assume Chinese internet companies can continue to access Nvidia-based computing power overseas. The Bernstein analysts have overweight ratings on both U.S.-listed Alibaba and Hong Kong-listed Tencent . “Tactically, Q2 2025 felt like a story shift second for the market’s consciousness of AI-driven development in China,” they said. “The newest information movement round China banning purchases of Nvidia chips is unhelpful on the margin for AI growth progress, a minimum of domestically,” the Bernstein analysts said. But they noted that, over time, domestic chip alternatives will likely at least “hit ‘ok’ territory.” Technology self-sufficiency The ramp up in China-made chips is just part of Beijing’s long-term ambitions for technology self-sufficiency. The strategy will result in “an acceleration of localization in key elements (sensors, motors, reducers, batteries), with China-based suppliers anticipated to dominate world price curves and improve aggressive stress on incumbent leaders,” Morgan Stanley analysts said in a report Wednesday on thematic investing in Asia. In the firm’s first-ever Asia thematic focus list, only a handful of mainland China-based companies were recommended, primarily in “AI & Tech Diffusion.” The Morgan Stanley screen looked for stocks based on factors such as valuation and earnings expectations, in addition to thematic exposure. The narrow selection includes Shenzhen-listed Naura Technology , a leading semiconductor equipment manufacturer. The Morgan Stanley analysts also highlighted Shenzhen-listed Inovance Technology for its automation and humanoid robot potential, as well as Hong Kong-listed electric car company Xpeng , citing its edge in advanced driver-assist technology and investments in humanoid robotics. In addition, “Tencent ought to profit because the market shifts focus from [large language model] capabilities to AI purposes and monetization,” the Morgan Stanley analysts said. Tencent on Tuesday announced new AI tools for industrial use at a two-day digital ecosystem summit in Shenzhen. “China is growing leading edge AI capabilities with considerably much less {hardware}, redefining expectations of computing energy necessities,” Morgan Stanley said, highlighting a Beijing policy of “AI+.” China in late August released details on the plan, which calls for integrating AI across industries. Beijing is expected to discuss its five-year development goals at a high-level meeting in October. — CNBC’s Michael Bloom contributed to this report.