JPMorgan Chase has released a research report stating that Chinese telecom operators' stock prices outperformed the Hang Seng Index by double digits from 2019 to 2024, with year-to-date performance also exceeding the market. The bank noted that the top three telecom operators not only offer attractive dividend yields but are also growth companies with AI growth potential.

JPMorgan stated that healthy competition, improved return on investment, and capital expenditure optimization should drive the industry's compound annual growth rate to 5% from 2026 to 2027. Chinese telecom operators have significant exposure to enterprise digitalization, a sector growing much faster than traditional telecom services.

The bank believes that the rise of Chinese AI and DeepSeek could drive a re-acceleration of cloud computing and artificial intelligence data center revenues, further enhancing valuations. It estimates that CHINA MOBILE (00941), CHINA UNICOM (00762), and CHINA TELECOM (00728) may have potential upside of 11% to 95% from current stock prices.

Among the three major telecom operators, the bank prefers CHINA TELECOM, as the company owns the largest cloud platform among the three operators and is expected to benefit most from China's AI theme, welcoming valuation re-rating and cloud computing business growth, followed by CHINA UNICOM and CHINA MOBILE respectively.

The bank further indicated that while it maintains "Overweight" ratings on the A-shares of all three operators, it has a stronger preference for H-shares, as H-shares trade at a 29% to 35% discount compared to A-shares.