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The winners of the artificial intelligence race will mostly be U.S. stocks, with only select names from China making the cut, according to BlackRock Investment Institute. The firm maintained its neutral view on Chinese stocks in a report Monday, while staying overweight on the U.S. “China has advantages across parts of that value chain, including manufacturing and batteries. Yet manufacturing strength alone does not guarantee attractive equity returns, reinforcing our preference for active investing rather than broad regional calls,” BlackRock said. While the Nasdaq Composite has gained a little over 12% this year, the tech-heavy ChiNext index of mainland China-traded shares has soared by more than 20%. But more broadly, Chinese stocks have tumbled with the MSCI China index down over 10%, while major U.S. indexes have climbed more than 10%. Beijing has rolled out policies to support domestic AI development, amid U.S. restrictions on high-end tech, and boost its use across industries. But against slower economic growth and fierce competition, it’s less clear how companies can generate profits. “Cheap, open-source AI could drive adoption, but that doesn’t necessarily translate into AI-provider profitability,” the BlackRock report said. The analysts do “see opportunities in physical AI,” in which the tech is integrated into hardware such as robotics. The stock-specific approach contrasts with expectations that the surge in Korean and Taiwanese stock markets, dominated by local chip giants, would spill over into China more broadly. Last month, Invesco Global Market Strategist for Asia Pacific, David Chao, told reporters that he anticipated in the coming years more foreign investors would take notice of earnings and exports growth in Chinese tech companies. He noted Latin American pension funds were already increasing their interest in China’s tech sector. But as global investors consider whether AI itself has become a bubble, BlackRock’s view is to buy stocks exposed to scarce industry inputs. Those include infrastructure plays, from China to Latin America, the report said. The U.S. remains BlackRock’s favorite. “While identifying the ultimate AI winners is difficult, we believe many will be found in the U.S. given its leadership in chips, frontier AI models and deep capital markets.”