Cornerstone Capital's Zhang Wei: The only way to fight bubbles is to invest in great companies.

At the 25th China Private Equity Annual Conference, Chairman of Cornerstone Capital, Zhang Wei, stated that the recent controversy in the market over whether there is a bubble in AI continues to heat up with both optimism about the long-term prospects of the industry and concerns about high valuations and cyclical investments. Zhang Wei stated that bubbles can be viewed from two perspectives: from the industry cycle, AI is currently booming and the future development space and prospects are extremely certain; from the financial perspective, AI has shown a tendency for the market value to deviate from the actual value, with the valuations of many companies being overdrawn. From a financial standpoint, bubbles will definitely occur in the financial markets and will inevitably burst. If the bubble bursts, all AI companies will be unable to escape, but a few outstanding companies will be able to pass through the cycle and reach new heights; at the same time, some companies that emerge after the bubble will create their own era based on their achievements during the bubble period. Zhang Wei believes that the bursting of a bubble is not the end, but a catalyst for great companies. Most companies disappear in bubbles, but those that are left profoundly change the face of the world. The top ten companies in terms of market value on NASDAQ today, such as NVIDIA, Apple, Google, Microsoft, Amazon, Broadcom, Meta, Tesla, Netflix, and ASML, have changed the way of life for all humanity and improved the well-being of all humans. Among them, NVIDIA, Amazon, and ASML all went public during the bubble period; Meta, Google, and Netflix, companies that went public after the bubble, have built their business models on the development of digital infrastructure brought about by the bubble and changes in capital market valuation models. Regarding the current AI boom, Zhang Wei also reminded investors that the core of investment will always be the balance between growth and valuation. "Investment should come back to common sense. If common sense does not apply, do not be deceived by dazzling appearances. The other party is most likely not a new species, but a monster snarling and baring its fangs. Any arrogant concept will eventually fall, and all industries have cycles of valuation," Zhang Wei stated. "What is frightening is not the macroeconomy, but following trend investments and chasing hotspots." Zhang Wei concluded by stating that the only way to combat bubbles is to invest in great companies.