China’s domestic server and chipmakers are entering a “super cycle” as the country’s local governments spend lavishly on computing infrastructure to support artificial intelligence development.

The AI Computing Power Concept Index, compiled by Chinese financial data provider Wind and comprising 54 component stocks, hit a record high on Monday, with an increase of 166 per cent over the past 52 weeks.

The frenzy was stoked by DeepSeek’s hint last week that it has changed its data format to support domestic AI chips.

At the annual China Computing Power Conference that concluded on Sunday, the Chinese government announced that the country would boost its AI computing capacity by 40 per cent this year.

As a result, China’s AI hardware-related companies have become the new darlings for Chinese onshore stock investors because most of the new orders are expected to flow into the hands of local suppliers amid Beijing’s tech self-sufficiency and network security push.

One of the best performers has been Cambricon Technologies, whose stock price has increased 460 per cent over the past 12 months on the belief it can be an alternative to US AI chip giant Nvidia.