Finance

Never Mind Bitcoin. China Loves AI Stocks

Investors look past spotty earnings and see the government’s blessing.

The Iflytek conference at the National Convention Center in Beijing on Nov. 9, 2017. — The Iflytek conference at the National Convention Center in Beijing on Nov. 9, 2017.
Photographer: Giulia Marchi/Redux

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By Jeanny Yu and Cindy Wang

December 20, 2017 at 9:00 PM UTC

This article is for subscribers only.

This article is part of the December 25, 2017 issue of businessweek.

Iflytek Co., a Chinese developer of speech-recognition software, has consistently failed to meet analysts’ profit estimates. And yet it’s one of the hottest stocks in China, gaining 117 percent this year as of Dec. 18, thanks to the latest investment craze sweeping the country’s $7.5 trillion equity market: artificial intelligence.

Iflytek and other AI-related companies are dominating gains among large-cap Chinese stocks. The buying frenzy has added $61 billion of market value to China’s five most popular AI plays, vaulting some into the ranks of the world’s most actively traded securities. BOE Technology Group Co., a Beijing-based maker of LCD panels that’s developing a system to help drivers avoid traffic accidents, had the equivalent of $2.5 billion in shares change hands on a single day in November, outtrading Wal-Mart Stores Inc. and AT&T Inc. combined.