Chen Guo of Dongcai: AI is not everything, there is gold everywhere in Chinese consumption, and the three major U.S. IPOs have a hint of bubble.
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Whenever the narrative of a great era reaches its climax, the market always starts asking the same question:
After consensus, what remains?
In the past year, AI has undoubtedly been the strongest theme in global capital markets. But as trades become increasingly crowded and valuations keep rising, the market has started searching for new answers.
On June 3, at Wallstreetcn’s “Master Guest Salon”, Chen Guo, Deputy Director and Chief Strategist at Orient Securities Research Institute, shared his insights on AI, consumption, the three major US IPOs, and the evolution of market styles in the second half of the year.
In his view, China’s AI is an important part of this bull market, but by no means the whole story. Replay→Will the three major US IPOs reshape the market style in the second half?
Quick View of Key Points:China’s AI is an important part of this bull market, but by no means everything.The greatest risk for investors right now is not necessarily missing out on AI, but viewing AI as the entirety.Chinese consumption is likely to experience “the best year in the past five years, but also the worst year in the next five years.”If you’re bearish on China consumer stocks now, you’re likely falling just before dawn.The future main line of consumption is not the “Moutai Index” but “Effervescent Assets.”The current market resembles 2021 more than 2015.The biggest keyword for the future market is not switching but rebalancing.With SpaceX, Anthropic, OpenAI rushing to IPO, what's in the air is the scent of a US stock bubble.AI is, of course, the stars and the sea, but before that often comes the J curve.Long-term opportunities lie in the application, not always in the ones selling shovels.
1. Don’t Miss Out on AI, But Don’t Treat AI as Everything
Host: Should investors be more wary of missing out on AI, or of thinking AI is everything?
Chen Guo: I think the biggest issue in the market right now is not missing out on AI, but treating AI as the whole picture.
Many people believe this bull market is purely an AI bull, and that silicon-based assets are getting stronger, while carbon-based are getting weaker. But I think China’s bull market is different from the US.
The US AI bull started with ChatGPT, while the true turning point for China’s stock market was after “924.” DeepSeek is very important—it’s China’s ChatGPT moment, adding brilliance to China’s bull market, but it isn’t everything.
So I always emphasize that China’s AI is an important part of this bull market, but not the whole.
We previously proposed the “Confidence Revaluation Bull,” with the core logic being: China is not the next Japan. The past few years have seen excessive worries about deflation, balance sheet recessions, even doubts about investability of Chinese assets. As confidence recovers, Chinese assets are being repriced.
Recently, I have repeatedly emphasized carbon-based assets because I believe the market is already overpricing.
Everyone only trusts upstream silicon-based and IT hardware, but is overly pessimistic about the carbon-based economy.
The US AI is pursuing an alternative path—AI agents directly replace workers. If income and employment issues aren't resolved synchronously, the impact will eventually feed back to consumption and the economy itself.
But China’s path is different.
China’s AI is more about being a tool and for the masses, not “layoff economics.”
So I believe, the US may see more extreme K-shaped divergence in the future, but China’s carbon-based economy has a floor.
Judging by current conditions, the balance sheet deflation in China is nearing a turning point, property in core cities is gradually stabilizing, and this is very important for consumption and the overall economy.
So I’ve been emphasizing one phrase recently:
The next few years will be entirely different from the last few years.
Chinese consumption this year is likely the best in the past five years, but also the worst in the next five years.
Therefore, one must not be bearish on Chinese consumption, core city real estate, and carbon-based Chinese assets.
2. Being Bearish on China Consumer Stocks Now Is Falling Before Dawn
Host: Why do you say China consumption may experience its best year in the past five years?
Chen Guo: If you’re looking for the world’s most promising long-term consumer market, I think China certainly ranks at the top.
Many people are pessimistic about Chinese consumption right now, but my view is the opposite. China is moving from a per capita GDP of over $10,000 to over $20,000—a stage that, in human economic history, usually coincides with a rising consumption share of GDP and accelerated expansion of the consumer market.
More importantly, China and the US face different circumstances.
The US’s AI path favors extreme K-shaped divergence, as some workers replaced by AI see income and purchasing power hit. But China's AI is more about tools and mass adoption, not just “layoff economics”.
I believe the underlying logic for Chinese consumption hasn’t been destroyed.
The current market discussion about consumption mostly focuses on deflation, property, and job pressures; but I pay more attention to changing consumer behavior.
As income grows and post-95s, post-00s become the main consumer force, Chinese consumers are increasingly focusing on themselves—pleasing themselves, treating themselves well.
Spending in future will not be just about basic needs, but about emotional value, spiritual joy, and health.
This change has appeared in many economies after per capita GDP surpasses $10,000, and China is no exception.
So I keep emphasizing:
The next few years will be completely different from the past.
Now, the market sees expectations for deflation and weak consumption, but I think this is wrongly priced.
China consumer stock valuations are at historical lows, and institutional allocation is also at historic lows, while many consumer firms possess both growth and dividend qualities.
Combined with the gradual stabilization of core city property and household balance sheets starting to repair, the economy may shift from expectations of deflation to expectations of reflation.
Therefore, my judgment is:
Right now, China’s consumer stocks are scattered gold.
Looking back from a few years in the future, those who are bearish on China consumer stocks today may be falling just before dawn.
3. The Core of China Consumer Investment Is No Longer the “Moutai Index”, but “Effervescent Assets”
Host: If future consumption opportunities aren't in the “Moutai Index”, where are they?
Chen Guo: I think the logic for investing in China consumption has fundamentally changed from five years ago.
Previously, the “Moutai Index” led consumer investments, with liquor as the core, underpinned by traditional socializing, business etiquette, and external evaluation systems—essentially consumption to please others.
Liquor will still have a market, but I think it’s no longer China’s main consumer line.
The true main line in the future is “pleasing oneself.”
With rising incomes and the post-95s/00s generation becoming major consumers, Chinese consumers are increasingly focused on their own experiences, not others’ opinions.
I call this type of opportunity “effervescent assets.”
It may not correspond to a specific sector, but to companies that consistently meet consumers’ emotional value, self-expression, and interest needs.
Sometimes it’s games, sometimes trendy toys, sometimes new consumer brands, but at their core, they all capture the same trend—consumers are increasingly willing to pay for what they love.
Many people believe that only rapid GDP growth or rapid income gains create opportunities for consumer stocks.
But that’s not true.
Global experience shows that the greatest opportunities in consumer stocks often come from upgraded demand, not GDP growth itself.
Among America’s best performing companies over the long-term, many are consumer firms. Their ability to transcend cycles isn't because the US was always growing fast, but because they consistently created new demand and satisfied new consumer psychology.
China is undergoing a similar process.
On one hand, consumer demand in China is changing; on the other, Chinese firms are increasingly skilled at creating new categories, building brands, and exporting culture.
In the future, Chinese consumer brands will influence not only Chinese consumers but also gradually gain global impact.
Just as many people drink Coca-Cola—not just the drink, but the culture and emotional value behind it.
Chinese consumer brands will have opportunities to achieve the same.
So, in the long run, I believe the opportunities for Chinese consumer stocks are very broad.
4. Don’t Short AI, But Stay Vigilant About the US Silicon Upstream Boom
Host: With tech stocks soaring, should investors chase or wait?
Chen Guo: There isn’t a standard answer.
Because investing is essentially an exchange of reward and risk. If you want the highest return, you need to accept more volatility and drawdowns—no method achieves both high returns and low risk.
So regarding AI, my attitude is clear.
First, I won’t short AI.
Last year, AI was our top pick; I still believe AI represents the future and won’t easily deny this industry trend.
Second, I will stay highly vigilant about AI.
Especially upstream silicon-based, especially the US upstream; this is the area I’m most cautious about now.
If we see, in the future, that the core companies such as Anthropic, OpenAI have slowing traffic or revenue growth, or that key indices and leading companies sharply fall from highs, I believe risks must be reevaluated.
From an investment perspective, I’m most opposed to putting all positions in one direction.
When market consensus is highly concentrated, it often means much capital has already been allocated in advance; those directions ignored and undervalued may actually offer better risk-reward ratios.
Many people want to buy only when the logic is fully verified.
But actually, an industry or company is usually most expensive when its logic is at its peak.
Real investment opportunities typically appear when logic is just beginning to improve.
So at this stage, I’ll keep some allocation to AI but also increase other directions.
Including consumption, effervescent assets, dividend assets, old and new energy, and financials—these are all worth attention.
From an index perspective, I think from now to year-end, the risk-reward of the Shanghai Composite Index is very attractive.
I can’t promise it won’t go down, but I think downside is limited, while upside potential is greater.
Therefore, the most important thing now is not to bet everything on a single direction, but to retain AI allocation while gradually laying out assets that are undervalued but fundamentally improving.
5. The Present Looks More Like Early 2021: No Bull-Bear Switch, More Style Rebalancing
Host: Does the current market resemble 2015 or 2021?
Chen Guo: Frankly, recent market trends do make me worry a bit.
I rarely turn bearish, always an optimist. But recently the market’s rapid uptrend, the crowding of AI trades, configurations, and the consistency of expectations remind me of some features from May 2015.
However, after checking all kinds of data, my conclusion is not 2015.
I don’t think we’ll see the kind of bull-to-bear switch or big index drops as after June 2015.
Compared to that, I think the present looks more like early 2021.
2021 didn’t see a bull-bear switch, but a major style shift.
Back then, the market moved away from the “Moutai Index” towards the “Ning Combination,” and at the same time many previously ignored low assets began to strengthen, including dividend assets and micro-cap stocks.
The current situation is similar.
Upstream silicon-based in A-share markets—with its trading heat, capital allocation, and market expectations—shares characteristics with the core assets of that time.
Therefore, I think the future market is more likely to see style rebalancing than a bull-bear switch.
The tech line may not end, but could shrink internally; meanwhile, some low-valued assets may start recovering.
This is why lately I’ve been focusing on consumer stocks, including Hong Kong consumer, new consumer, and the effervescent assets I mentioned.
From a configuration perspective, I tend to expect two main lines in the market:
One is still tech growth;
The other is undervalued consumption and carbon-based assets.
If the US stock market doesn’t see a systemic bull-bear switch, I think it’s likely that A-shares will move in this structure.
Of course, a major variable in the second half is still US stocks.
If US stocks adjust noticeably, some A-share tech stocks tied closely to the US AI supply chain could be affected.
So in the next half year, we need to focus on both A-shares and US stock changes.
6. With SpaceX Going Public, Smells Like a US Tech Bubble
Host: Is SpaceX’s IPO a milestone in commercial aerospace or a bubble signal?
Chen Guo: Honestly, seeing SpaceX, Anthropic, and OpenAI all rushing to IPO, my first feeling isn't good.
In a word:
Bubble.
Of course, SpaceX is a great company, and Musk is one of the greatest entrepreneurs of this era. I respect him deeply.
But capital markets shouldn't become idol worship.
In the long run, SpaceX truly represents the stars and the sea, with massive imagination. But from a business perspective, only Starlink has proven its model so far; other businesses are still a long way from maturity.
More importantly, its current valuation is extremely high.
With market valuation near $2 trillion, PS ratio over 100. In the past, 100 times PE was expensive; now, the market is willing to give an immature commercial company 100 times PS. I think caution is warranted.
Many investors buy SpaceX out of belief in Musk, not on performance.
But from financials, I don’t see it matching its valuation in growth speed or profitability in the short term.
Another warning signal is the rapid push for IPOs.
Whether SpaceX, Anthropic, or OpenAI—all seem eager to go public while market sentiment is hottest.
This makes me consider:
If companies themselves see now as a great financing window, should investors think if current valuations are already very high?
I’m not bearish on SpaceX’s future, but I am cautious about the sentiment reflected in its IPO.
Especially since SpaceX is huge; it may enter Nasdaq indices. If volatility follows IPO, it could impact not just itself but the tech sector’s risk appetite overall.
So as an investor, my biggest feeling about SpaceX isn't commercial aerospace, but:
What we're sensing is a US stock bubble.
7. OpenAI, Anthropic Rushing to IPO Hurts Confidence in AI Business Model
Host: How will OpenAI and Anthropic’s IPOs affect global AI markets?
Chen Guo:
Compared to SpaceX, Anthropic and OpenAI are somewhat different.
SpaceX is Musk’s story, while Anthropic and OpenAI are the cornerstones of this AI bull.
For the last two years, global AI capital expenditure expanded continuously because the market believed: AI apps will generate sufficient income and profits.
This logic is mainly verified by Anthropic and OpenAI.
According to data, Anthropic is growing rapidly, with near exponential revenue growth, almost reaching profitability. But its valuation is also very high. Its Pre-IPO value is about 20 times PS, and after listing, likely higher.
OpenAI is similar—possibly even higher valuation, but hasn’t yet proven it can profit.
What concerns me isn’t whether they can list, but why they are rushing to list.
If a company expects free cash flow to keep improving, it theoretically isn’t eager to finance at this time.
But both Anthropic and OpenAI are actively pushing for IPO. This makes me wonder:
Are they proving they’re increasingly profitable, or proving they’re still highly cash-strapped?
For someone long-term bullish on AI, this is an important signal.
Because if the two core application layer companies still rely heavily on financing, market expectations for AI monetization and free cash flow will face greater tests in the future.
Of course, I’m not bearish on AI.
I still firmly believe AI is one of the most crucial industry trends for the future.
But investment and industry aren’t the same thing.
From an industry perspective, AI is fine; from an investment perspective, if Anthropic and OpenAI see slowing user or income growth, or IPO performance below expectations, the entire AI value chain’s valuation may be reevaluated.
Chinese tech companies will be affected indirectly.
Because China’s AI business model, profit cycle, and industry path are not identical to the US.
But if Anthropic and OpenAI shift, especially post-IPO if the market reassesses the value of AI apps, then valuations for global tech assets—including China’s tech sector—will see some impact.
So for investors, these two IPOs are worth watching.
8. J Curve Is More Important than K Divergence—Short-Term Speculate Upstream, Mid-Term Invest Downstream
Host: What logic should guide asset allocation in the second half?
Chen Guo: My answer is two words:
Balance.
Looking at the current point in time, I believe A-shares and Hong Kong shares offer much better risk-reward than US stocks.
Why?
Because there’s an interesting phenomenon in US markets:
US carbon-based economy is showing signs of recession, US tech giants are seeing growth slow, but US silicon upstream is still in carnival mode.
This structure makes me uneasy.
Many explain the market with the “K-shaped divergence,” but I prefer “J Curve.”
Every technological revolution follows this.
Initially, the market sees rising penetration and expanding industry scope, capital rushes upstream—but the technological revolution is also a destructive innovation, shaking up the old economy, jobs, and income.
When this shock accumulates enough, carbon-based economy comes under stress and then feeds back into the silicon-based economy.
The internet revolution was this way, AI will be no exception.
I keep emphasizing that AI is surely the future—the stars and the sea.
But investors can’t only see the stars and the sea, and ignore the cyclical fluctuations in between.
Many AI application companies are still barely profitable—industry leaders like OpenAI face high costs.
If upstream costs can't come down, the application layer cannot achieve broad commercialization.
So from an investment perspective, my stance on AI has always been:
Long-term optimism, mid-term caution.
Short-term, speculate upstream; mid-term, focus downstream; long-term, applications are most likely to succeed.
This was true in the internet era, and I believe the same for AI.
So right now, for AI upstream assets, I won’t liquidate or short, but must evaluate risks and timing with a cyclical mindset.
By contrast, opportunities in China’s carbon-based assets are clearly underestimated.
China AI and US AI do not follow the same path—US emphasizes replacement, China emphasizes tools.
And China's carbon-based economy is now generally sitting at low valuation, low expectations.
Whether it’s consumption, overseas consumption, emotional consumption, or companies with strong brand/IP/consumer mindshare, I see good setup opportunities.
So to summarize my second-half allocation logic:
First, allocate to AI but optimize the circle, while keeping a close eye on industry and US stock signals.
Second, gradually increase holdings of China’s carbon-based leaders.
Third, move the overall portfolio towards balance.
In the next half year, I believe A-shares and Hong Kong shares should occupy a more important place in asset allocation.
Because compared to the US silicon upstream’s continued frenzy, many assets in China remain at low expectations, low valuations.
And opportunity often comes from here.
AI remains the most important theme in global markets.
But as Chen Guo repeatedly emphasized in the live broadcast:
China’s AI is an important part of this bull market, but not the whole.
As the market focuses more on silicon-based assets, carbon-based economy, consumption revaluation, and style rebalancing may be gestating new opportunities.
For investors, what matters may not be choosing between AI and consumption, but continuously looking for the next expectation gap beyond consensus.
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