AI Paradox: US Fears Bubble, China Sees Boom; Investors Shift Focus Amidst Global Race

• US investors warn of an AI bubble, citing high spending, uncertain profits, and a potential dot-com era repeat, leading some to reduce AI stock holdings.
• China's AI and chip sector is a national mission with heavy government subsidies, driving IPOs up by 700-800% on day one.
• Chinese AI companies offer cheaper valuations (a quarter of US counterparts), strong government support, and lower costs, attracting international investors.
• The MSCI China ETF rose 29% in 2025, reflecting growing investor interest in Chinese AI giants like Alibaba and Baidu.
• Investors are balancing portfolios, recognizing US AI's high valuations and risks versus China's rapid growth and lower prices, despite geopolitical concerns.

Why It Matters: AI investment splits: US faces bubble fears, China sees rapid growth, prompting a global portfolio rebalance.