[DigitalToday reporter Jinju Hong (홍진주)] China’s optical module maker Zhongji Innolight has risen to become the biggest-weight stock in the CSI300, China’s benchmark equity index. Analysts say a growing focus on beneficiaries of expanding investment in artificial intelligence infrastructure is sharpening a rush into AI-related shares in China’s stock market.

The South China Morning Post reported on June 5 that Zhongji Innolight’s weighting in the CSI300 reached 5 percent on the day, the highest among index constituents. In the CSI300, which is calculated based on free-float market value, Zhongji Innolight first overtook battery company CATL last month and has since widened the gap.

CATL’s index weighting now stands at 4.1 percent. China’s leading liquor maker Kweichow Moutai follows at 3 percent, and another optical module maker, Eoptolink Technology, is next at 2.8 percent.

The ranking shift shows that AI-related companies are emerging as the market’s central axis in China’s stock market as well. It means investors’ attention is concentrating on AI infrastructure and data-centre related companies rather than the financial and consumer sectors that previously led the market.

In fact, technology’s share of the CSI300 has expanded to 22 percent, making it the largest sector. By contrast, the weighting of financials has fallen to 19 percent. Expectations for growth in the AI industry are being directly reflected in the index’s composition.

Zhongji Innolight produces optical modules used for ultra-high-speed data transmission between server racks at AI data centres. Demand has surged as U.S. big tech companies invest billions of dollars in building AI infrastructure, and the company’s performance is showing rapid growth.

Its share price is also posting a sharp rise. Zhongji Innolight shares have climbed nearly twofold so far this year, extending last year’s fivefold rally.

Its overseas customer exposure is also high. Alphabet is the biggest customer, accounting for 22 percent of total revenue, followed by Amazon with 11 percent and Meta Platforms with 6.4 percent, according to Bloomberg data. In China, Huawei is the largest customer at 5 percent, while Alibaba accounts for about 1.9 percent.

Yi-hong Wang (왕이훙), an analyst at TF Securities, said Zhongji Innolight would benefit as rising computing demand and expanding capital expenditure by major customers continue. He added that it remains among industry leaders in research and development capabilities and supply capacity.

Earnings growth is also pronounced. Zhongji Innolight’s first-quarter net profit rose 262 percent from a year earlier on improved profitability, while revenue increased 192 percent. Annual net profit is also expected to rise 156 percent this year, according to market forecasts compiled by Bloomberg.

Markets are interpreting the reversal in index weighting as a signal of a generational shift in China’s stock market. Analysts say the market’s centre of gravity is also shifting toward companies benefiting from AI infrastructure, similar to how technology accounts for about 40 percent of the U.S. S&P500. The CSI300 index, launched in 2005, is up about 4 percent so far this year.