For much of this year, anyone chasing China’s artificial intelligence rally has been staring at the same handful of chip stocks, treating Nvidia-adjacent anything like it’s holy scripture.
But in the background, a very different trade has been forming. The smart money isn’t chasing the shiny algorithms. It’s buying the concrete, steel and electrons that keep those algorithms alive.
Because here’s the truth,
AI isn’t magic, it’s a furnace. And that furnace burns power, metal and cooling at a scale the world hasn’t fully priced in yet.
That shift in thinking is already showing up on the tape.
While the CSI 300 has barely twitched, an index tracking Chinese energy names rallied 10% in October and is now beating the broader market for a second straight month.
Seven of the top 10 performers in the benchmark over the past month were companies tied to AI infrastructure, not AI models.
Wall Street loves to talk about “picks and shovels” plays. In China, investors seem to be taking that literally.
“No power, no AI,” BofA Securities wrote bluntly, at the end of October.
By 2030, BofA expects roughly one-third of China’s total AI bill to go into the scaffolding around the technology – power, metals, cooling, storage – not the fancy chips.
In other words, the market is finally waking up to the idea that the trillion-dollar AI boom still needs someone to keep the lights on.
Grid turns into an investment theme
UBS now thinks China’s power demand could double its earlier forecast, hitting 8% annual growth by 2028–2030.
The reason? Data centres, electrification, and export manufacturing – the same forces that underpin the country’s industrial revival.
Power equipment makers are already riding that wave.
CSI Solar is up 30% in November, TBEA has jumped 20%, and the entire CSI 300 Energy Index still trades at a forward PE of around 13. Not cheap, but downright humble compared to the IT sector’s 34x.
“We prefer local power equipment manufacturers,” said Ken Liu from UBS, pointing to Beijing’s plans to pour money into infrastructure under the next Five-Year Plan.
For investors, this is the part of the AI story that still feels early, the grunt work behind the glamour.
AI metals: copper, aluminium and digital concrete
Data centres are basically giant metal boxes stuffed with even more metal. Which makes the metals trade a surprisingly neat way to play AI without paying AI multiples.
Copper demand from Chinese data centres is now expected to rise 20% annually through 2030.
Aluminium producers are also having a moment. Aluminum Corp. of China is up 35% this month, while Shandong Nanshan and Yunnan Aluminium have each gained around 30%.
If you’re looking for AI leverage without AI froth, this is where analysts keep pointing.
Energy storage
Power outages and AI clusters don’t mix, which is why emergency backup systems are suddenly a booming segment.
UBS’s Yishu Yan expects this to become a major contributor for A-share utilities, while Citi thinks the upside could be bigger than consensus if data-centre growth and storage demand keep tracking each other.
CATL just hit a new record high after securing a staggering 200 GWh storage-battery order. Battery-materials names – Capchem, Senior Technology Material, Eve Energy – followed suit.
If “picks and shovels” is the theme, storage is the insurance.
Optical fibre
Everyone obsesses over GPUs, but GPUs don’t mean much if they can’t talk to each other.
That’s where optical transceivers come in, and why companies like Zhongji Innolight, Eoptolink and Suzhou TFC have all booked triple-digit gains this year.
It’s the kind of sector that only gets noticed after the rally has already happened.
In the end, the question isn’t what China’s building for AI; it’s what parts of that build-out still have room to run.
And right now, the best answers are found in the copper wiring, the grid equipment, the battery sheds and the fibre cables.
This article is not financial advice. Always do your own research or speak with a licensed adviser before making investment decisions.
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