According to a research report from Morgan Stanley, China's artificial intelligence (AI) sector is entering a new phase, shifting its focus from catching up on technological capabilities to capturing value. The emphasis is moving from training to inference, from technology to application, and from potential to actual profitability. The firm believes that at this stage, enablers and foundational models remain critical investment themes, while the widespread adoption of AI also presents investment opportunities for beneficiaries. In the firm's risk-reward analysis of AI application companies, Beisen Holding (09669), MEITU (01357), Beijing Roborock Technology Co.,Ltd. (688169.SH), Midea Group Co.,Ltd. (000333.SZ), and Ecovacs Robotics Co.,Ltd. (603486.SH) stand out. MINIMAX-WP (00100) and KNOWLEDGE ATLAS (02513) are key players among China's foundational model providers, while Alibaba (BABA.US) is identified as the best-positioned full-stack AI platform among the companies covered by the firm. Morgan Stanley highlights Contemporary Amperex Technology Co.,Ltd. (300750.SZ,03750), Anhui Yingliu Electromechanical Co.,Ltd. (603308.SZ), and Sieyuan Electric Co.,Ltd. (002028.SZ) as key targets in the power sector. The firm maintains a positive outlook on Cambricon Technologies Corporation Limited (688256.SH), ILUVATAR COREX (09903), Naura Technology Group Co.,Ltd. (002371.SZ), Advanced Micro-Fabrication Equipment Inc. China (688012.SH), Acm Research Inc. (ACMR.US), SMIC (00981), and Unimicron (3037.TW), as these AI enablers are expected to benefit from the long-term trend of semiconductor localization in China.