UBS provided a benchmark list: Cambricon vs. NVIDIA, Xiaomi vs. Tesla, SMIC vs. TSMC

Cambricon and NVIDIA "spar", Xiaomi and Li Auto benchmark Tesla, SMIC and TSMC "compete"… UBS provided a list of benchmark Chinese and American tech stocks in its latest research report.

With the release of DeepSeek's R1 model, the development of AI in China has once again become a focal point for investors. The UBS James Wang team pointed out in their report on the 12th that since the beginning of the year, AI-related Chinese listed stocks have averaged a 15% increase, outperforming the MSCI China Index by 9%. Considering the current ample liquidity and low interest rates, UBS believes there is an opportunity for valuation re-evaluation of AI-related stocks.

UBS stated that Cambricon's valuation is three times higher than NVIDIA's, while Xiaomi and Li Auto's valuations are 80% and 90% lower than Tesla's, respectively, and SMIC's valuation is 15% lower than TSMC's.

The report also mentioned that the development of the AI industry typically drives the valuation of related stocks higher. In the past 4G, 5G, and cloud computing eras, related stocks outperformed the market by 50% to 100%, and such rebounds usually last for 1 to 2 years. UBS believes that the current market rebound related to AI may not yet be halfway through, especially for software stocks, which still have significant room for valuation increases in the future.

AI Companies Benchmark: The Competitiveness of Chinese Enterprises

In this report, UBS detailed a series of AI-related companies' benchmark lists and conducted valuation comparisons. This list covers multiple fields including hardware, software, internet, and automotive, with some comparisons particularly noteworthy:

• Cambricon: As China's leading AI chip manufacturer, Cambricon is benchmarked against NVIDIA in UBS's list. Cambricon's valuation is 312% higher than NVIDIA's.
• Xiaomi: Xiaomi has rapidly developed in the smart hardware and AI fields. In UBS's list, Xiaomi is benchmarked against Tesla, and although Xiaomi's valuation is 80% lower than Tesla's, its potential in smart hardware and AI ecosystems should not be underestimated.
• Li Auto: As one of the representatives of China's new energy vehicles, Li Auto is benchmarked against Tesla. Li Auto's valuation is 90% lower than Tesla's, reflecting market expectations for its future development.
• SMIC: SMIC is benchmarked against TSMC in UBS's list. SMIC's valuation is 15% lower than TSMC's, and its position and technological advancements have become an important force in the AI chip manufacturing field.

Detailed charts are as follows:

The New Wave of Technology Trends

The report pointed out that although AI accounts for a limited share of revenue in most companies, the rapid development and application of AI technology will drive the valuation of related enterprises higher. UBS believes that infrastructure providers (such as IDC companies and hardware manufacturers) will be the first to gain revenue benefits from AI applications, as AI users (such as cloud service providers) are eager to build ecosystems, even at the cost of profitability UBS is optimistic about software stocks, believing they are likely to see significant valuation re-evaluation in the coming years:

"Based on the experiences of 2019-2020 (cloud computing) and 2023 (AI), the valuation re-evaluation of software companies has been the most significant, with the price-to-sales ratio (P/S) rising by 4-14 times during that period. Compared to the broader market, software stocks are currently trading at 53% lower than their peak in early 2021 and 38% lower than their peak in 2023."

Additionally, UBS mentioned that the development of AI technology will drive transformation across multiple industries, including the internet, finance, healthcare, and automotive sectors. For example, AI technology will help internet companies optimize advertising technology and enhance user experience; financial institutions will reduce costs and improve efficiency through AI technology; and the healthcare industry will leverage AI technology to accelerate drug development and improve diagnostic accuracy