China and Gulf Region Lead AI Adoption as Related Stocks Gear Up for Takeoff

Introduction: Emerging Markets Become the New Frontier of the AI Wave

While global investors remain fixated on U.S. tech giants, a quiet revolution is accelerating across emerging markets. The latest market research shows that China and the Gulf Cooperation Council (GCC) nations are leading the world in both the speed and depth of artificial intelligence adoption, and the resulting investment opportunities are being reassessed by a growing number of institutional investors.

According to a newly released report by market analysis firm Pinder, approximately one-fifth of emerging market company revenue is already directly tied to artificial intelligence — a proportion far exceeding what many market participants previously expected. Meanwhile, about 40% of these companies' labor costs — roughly 5% of total operating costs — could be profoundly affected by AI automation technologies. This means AI is not only creating new revenue streams but also reshaping the competitive landscape of emerging market enterprises from the cost side.

Core Analysis: Why China and the Gulf Region Are Leading

China: The Dual Advantage of Policy-Driven Support and Industrial Ecosystem

China's rapid advancement in AI is no accident. At the national level, the "New Generation Artificial Intelligence Development Plan," released in 2017, has established a comprehensive policy support framework spanning basic research to industrial application. Since 2024, domestically developed large language models represented by DeepSeek have risen to prominence, further demonstrating the independent innovation capabilities of Chinese AI companies in charting their own technological paths.

On the industry side, China boasts the world's largest manufacturing system and the richest array of application scenarios. From smart manufacturing and smart cities to fintech and healthcare, AI technology is permeating every industry at an unprecedented pace. Statistics show that the number of AI-related companies in China has surpassed 4,400, second only to the United States. However, in terms of the breadth and speed of real-world deployment, China has already taken the lead in certain vertical sectors.

More notably, Chinese enterprises have demonstrated exceptional pragmatism in AI commercialization. Unlike Silicon Valley companies that tend to focus on the "foundation model race," a large number of Chinese companies are more focused on converting AI technology into practical productivity tools, thereby directly driving revenue growth and cost optimization.

The Gulf Region: Oil Wealth Fueling AI Transformation Ambitions

GCC nations, particularly the UAE and Saudi Arabia, are positioning AI as the core engine of economic diversification. Saudi Arabia's "Vision 2030" and the UAE's "National AI Strategy 2031" have both elevated AI to the level of national strategy.

The UAE established the world's first AI university — Mohamed bin Zayed University of Artificial Intelligence (MBZUAI) — and has invested heavily in global AI startups through sovereign wealth funds. Saudi Arabia's Public Investment Fund (PIF) has also poured tens of billions of dollars into AI infrastructure in recent years, including large-scale data centers and computing platforms.

These nations possess abundant capital, clear policy direction, and the governance advantage of rapid decision-making, enabling extremely fast deployment of AI technology in government services, energy, and transportation. The Gulf region is accelerating its transition from an "oil economy" to a "data economy," with AI serving as the critical technological foundation for this transformation.

Analysis: Which Sectors and Stocks Could Benefit?

Revenue-Side Growth Opportunities

The Pinder report's finding that "one-fifth of revenue is AI-related" reveals an important trend: the AI dividend in emerging markets is no longer confined to the conceptual level but is tangibly reflected in corporate financial statements. The following categories of companies deserve close attention:

• AI Infrastructure Providers: Companies in chip design, server manufacturing, and data center construction. China's SMIC and Hygon Information Technology, as well as suppliers providing computing infrastructure to the Gulf region, are likely to continue benefiting.

• AI Application Layer Leaders: Companies that have achieved commercial AI deployment in vertical sectors such as fintech, autonomous driving, and enterprise services — including SenseTime, Kingsoft Office, and iFlytek — are seeing their AI-related revenue share steadily increase.

• AI Transformation Pioneers in Traditional Industries: Traditional enterprises that have taken the lead in using AI technology to restructure business processes and significantly improve operational efficiency, such as leading companies achieving intelligent upgrades in manufacturing, energy, and retail.

Cost-Side Efficiency Revolution

The report's finding that "40% of labor costs could be affected by AI automation" is equally thought-provoking. This means that labor-intensive industries with highly standardized processes will gain significant cost advantages from the introduction of AI automation.

For investors, two types of opportunities merit attention: first, technology vendors providing AI automation solutions; and second, industry leaders that have adopted AI automation early and gained cost advantages as a result. In emerging markets, automation replacement rates are likely to rise fastest in areas such as customer service centers, data processing, and basic financial services.

Rediscovering Valuation Gaps

Compared to U.S. AI concept stocks, which are generally trading at high valuations, AI-related targets in emerging markets remain significantly more attractive in terms of valuation. Some Chinese AI companies trade at price-to-earnings ratios just one-third to one-half of their U.S. counterparts, while Gulf region technology-listed companies have yet to be fully priced in by global capital. This valuation disparity offers potential alpha for allocation-oriented investors.

Outlook: The Next Golden Track for AI Investment

Looking ahead, the leading advantages of China and the Gulf region in AI adoption are expected to strengthen further. Several key trends are worth ongoing monitoring:

First, AI cooperation between China and the Gulf region is deepening. In recent years, collaboration between Chinese tech companies and Gulf nations in AI has grown increasingly close, spanning technology exports to joint R&D. The two sides are building an AI industry collaboration network that bridges Asia and the Middle East. This cross-regional cooperation will open broader market opportunities for related companies.

Second, the gradual refinement of AI regulatory frameworks will unlock greater commercialization potential. Both China and the Gulf states are accelerating AI governance and regulatory legislation. Clear rules will reduce compliance uncertainty for businesses and facilitate larger-scale AI technology deployment.

Third, the deep integration of AI with the real economy is still in its early stages. The current one-fifth AI-related revenue share is expected to rise to one-third or even higher in the coming years. As the cost of large language model technology continues to decline and application scenarios keep expanding, the reshaping of emerging market enterprise value by AI has only just begun.

For global investors, it is time to extend their gaze in the AI investment landscape beyond Silicon Valley to Shenzhen, Riyadh, and Abu Dhabi. Emerging market companies that have secured first-mover advantages in the AI wave may well be the "hidden champions" most worthy of attention in the next technology investment cycle.