China’s AI Dreams Are Rallying; Here’s How Indians Can Take Part

On February 11, 2026, a pivotal moment arrived for Chinese technology. Zhipu AI, one of China’s fastest-growing artificial intelligence firms, unveiled its latest flagship AI model, GLM-5. The model’s enhanced coding abilities and long-running agent capabilities have put it in direct competition with global leaders such as Anthropic’s Claude Opus 4.5 and Google’s Gemini 3 Pro on certain benchmarks, according to Reuters reporting. Driven by domestically manufactured chips from the likes of Huawei, Moore Threads, Cambricon and Kunlunxin, this represents a major step in China’s push to build self-sufficient AI stacks amid tightening US export restrictions.

What makes this milestone significant isn’t just technological merit. It speaks to a growing narrative that China is not just catching up but trying to challenge Western dominance in frontier technology. Over the past year, a cluster of Chinese AI and tech firms including MiniMax and ByteDance have been aggressively rolling out upgraded models and AI tools, fuelling investor optimism.

Let’s find out in this blog how China’s AI surge is reshaping its stock markets, what’s driving the momentum, and the simple ETF routes Indian investors can use to participate in this growing tech wave.

Why the Rally in Chinese AI and Tech Stocks?

In markets everywhere, headlines alone don’t move share prices. What matters to investors is the economic and strategic signal those headlines send.

The market reaction was immediate. Shares of Zhipu AI surged nearly 30% in a single session, and the momentum wasn’t isolated. The rally spilled over into the broader ecosystem, lifting the Shanghai STAR AI Industry Index as investors rotated capital into other domestic AI and semiconductor names as well. It was one of the clearest signals yet that China’s AI story is starting to influence broader equity sentiment, not just niche tech counters.

In China’s case, there are three big drivers behind the recent surge in AI and tech equity prices:

1. Innovation at Scale

The rapid succession of model launches, from Zhipu AI’s GLM-5 and MiniMax’s M2.5 to video AI from Bytedance suggests that China’s AI development engine is firing on all cylinders. Globally competitive models backed by local semiconductor support is a powerful combination for growth-oriented capital.

2. Strategic Self-Reliance

China is pushing hard to build a domestic tech stack that relies less on external suppliers. Using locally developed silicon to train and run advanced models is a big step toward that goal. This policy focus has both industrial and geopolitical implications, and markets tend to reward visible progress.

3. Valuation Gaps and Growth Expectations

Even with recent gains, analysts note that the total market value of China’s AI ecosystem remains significantly smaller than that of global peers; about 6.5% to 8% of the combined value of US and private AI companies. This suggests investors see room for long-term growth.

In other words, the rally isn’t just hype. It reflects genuine technological progress combined with structural policy support and a narrative that resonates with long-term capital.

From Individual Stocks to Diversified Access

If you’re an Indian investor watching the story unfold, here’s the reality: buying individual Chinese stocks isn’t always straightforward. Direct stock purchases require access to Hong Kong or mainland exchanges, which comes with regulatory and operational hurdles.

But there is an easier, diversified route: US listed Exchange-Traded Funds (ETFs).

ETFs offer a basket of equities tied to specific themes or markets, in this case, Chinese innovation, AI, robotics and semiconductor sectors, allowing you to ride broader trends without the binary risk of single stocks.

How Indian Investors Can Invest in China-Tech Themes

Indian investors can invest in international ETFs through global investing platforms like INDmoney that offer access to US listed ETFs

Here’s a list of some AI, tech and China-focused ETFs that include exposure to companies in AI, semiconductors, robotics, and tech innovation:

1. KraneShares CSI China Internet ETF (KWEB): Tracks major Chinese internet and tech giants like Alibaba, Tencent, Baidu and Meituan. While not pure AI, many constituents are heavy AI adopters and cloud leaders.
2. iShares MSCI China ETF (MCHI): Broad exposure to large and mid-cap Chinese companies across sectors, including technology, semiconductors and innovation-driven firms. Acts as a diversified China core holding.
3. Invesco Golden Dragon China ETF (PGJ): Focuses on US-listed Chinese companies, including several technology and platform businesses that are actively investing in AI and digital infrastructure.
4. KraneShares Hang Seng TECH ETF (KTEC): Targets the Hang Seng TECH Index, which includes Chinese technology and innovation leaders across e-commerce, cloud, AI, EV tech and semiconductors.
5. SPDR S&P China ETF (GXC): A broad China market ETF with meaningful allocation to technology and communication services, offering indirect participation in AI and semiconductor growth.

Why This Matters for Long-Term Investors

China’s AI and semiconductor sectors sit at the intersection of technology leadership and national strategic ambitions. The pace of innovation, combined with huge domestic addressable markets and top-down policy support, makes this a compelling theme for long-term, diversified exposure.

ETFs, because they spread risk across multiple companies and sectors, help investors tap into this trend without over-betting on single names.

As an investor interested in frontier technologies and global diversification, these thematic ETFs could be a meaningful addition to a long-term portfolio, especially if you believe China’s AI march is more than a short-lived story.

Disclaimer:

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