After a wild rout, several big players in China say the worst may be behind them for now. Shanghai Chaser Asset Management told clients it views July's plunge as likely being the trough of this cycle. Intewise Capital Management's Liu Xiaolong called the correction "probably over," and in an August letter added, "AI hardware demand itself is very strong, and for 2027, too," while cautioning, "But beyond 2028, nobody can say."
Even so, managers are drilling into what it would take to sustain the boom. They flagged the enormous outlays required, the potential hit to jobs, and the uncertainty of a frenzy that one manager likened to "blind men feeling an elephant."
Among the seven firms, four kept an AI bias going into and through the July selloff, though some trimmed exposure. By July 31, those four had gained no less than 19% year-to-date. The three that largely stayed out of AI hardware - Ren Bridge, Ridou Investment Management and Qinchen Asset Management - were each down by more than 8%.
The drawdowns were brutal even for the bulls. In July, the globally allocated fund at Chaser sank 34%, while Intewise's multistrategy product declined 29%, compared with an 8% fall in the CSI 300 Index. Even so, as of Aug. 31 both funds remained ahead by over 30% for the year.
Hunjin Capital's Yueyang fund reduced its AI exposure roughly 40% ahead of and throughout the selloff, recorded a 12.6% decline in July, notched a small loss in August, and was still up about 16% for the year. According to industry data, Shanghai Chaser, Ren Bridge, Intewise, Ridou, Qinchen and Fusheng all have assets above 10 billion yuan, and Hunjin oversees in excess of 5 billion yuan. Fusheng did not respond to a request for comment, and the other firms declined to comment.
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Hunjin estimates AI firms would need as much as $700 billion in annual recurring revenue next year to keep pace with current spending, implying roughly a $500 billion increase. On that math, the firm said coding alone would need to replace 4 million workers.
Managers said they are more focused on global dynamics than China-specific issues. Beijing Ren Bridge Asset Management used part of its August letter to weigh Nvidia's upbeat outlook for the next fiscal year, comparing it to Microsoft's Windows Vista era almost two decades ago, when a rush for new hardware ultimately did not help the stock. Ren Bridge wrote that Nvidia has become a "giant dragon," adding, "it may have forgotten its own youth and its original purpose," and concluded, "But cycles always recur and a new one may be dawning."
Shanghai Fusheng Assets Management Co.'s chairman and portfolio manager Lu Hang called AI a "generational variable" in a July letter. The firm added that the era of easy gains has ended and that stock picking is shifting from "who invests more, to who invests better."
Here is the through-line: funds that rode the AI wave took a hard hit in July but many are still ahead this year, while those that sidestepped AI hardware have lagged. The letters also underline the sheer cash required to keep AI growing, along with real labor shifts if software takes over more coding work. Near term, managers see strong demand. Farther out, the path gets foggier.
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