These stocks will benefit from China’s AI ecosystem localisation: analyst

Investing.com -- China's government is reportedly planning to invest roughly 2 trillion yuan ($295 billion) over the next five years to build a nationwide data center network, and Citi has identified a basket of stocks it believes will be among the primary beneficiaries.

Led by the NDRC, the initiative will be operated primarily by major state-owned operators and mandates at least 80% reliance on domestic AI chips. Citi called the plan "a monumental catalyst for China's digital infrastructure."

On the data center side, Citi pointed to GDS and VNET as already capturing momentum, citing record first-quarter 2026 wholesale bookings.

The bank noted GDS logged approximately 200MW in new bookings in the quarter, while VNET signed more than 500MW in new orders, trends Citi said will be directly supported by the accelerating demand the plan is set to generate.

At an assumed all-in unit cost of roughly 200 million yuan per megawatt, Citi estimates the plan implies approximately 10 gigawatts of new AI data center capacity over five years, equivalent to around 2 gigawatts per year.

That would expand China's AI-grade capacity by roughly 50% relative to today's estimated installed base of 20 gigawatts.

On supply chain localization, Citi sees "IEIT, Lenovo and ZTE as key beneficiaries as localised AI server ecosystem proxies," adding that the domestic chip mandate will drive AI server demand for their supply-constrained server businesses.

Accelink, as a leading domestic optical transceiver maker, and Chinasoft, as Huawei's ITS and ISV partner, round out Citi's list of favored names.

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