In 2025, Chinese tech stocks, led by top firms like Alibaba and Tencent, surged by $439 billion, significantly outperforming US tech stocks, which experienced a downturn. Driven by government support and advancements in AI, the Chinese sector shows signs of continued growth. Meanwhile, US stocks are facing increasing skepticism due to high valuations and policy uncertainties under President Trump, prompting a rotation of investor interest towards China.
In 2025, the Chinese tech sector has made a remarkable comeback, experiencing a $439 billion rally that significantly outpaces the performance of major US tech stocks. The notable resurgence encompasses an equal-weighted collection of seven Chinese tech giants, referred to as the “7 titans” by Societe Generale SA, including Alibaba and Tencent, which have gained over 40% this year. Conversely, an index of US stocks known as the “Magnificent Seven” has faced approximately a 10% decline, impacting the Nasdaq 100 Index.
This turnaround in market fortunes was unexpected, particularly after the Nasdaq had recorded new highs earlier in the year. Initially, Chinese stocks were struggling due to previous regulatory issues and weak consumption recovery. However, the emergence of AI endeavors, notably highlighted by DeepSeek, has reshaped investor perceptions, indicating that China could quickly approach America’s level of technological advancement.
The surge in Chinese tech stocks has prompted even past skeptics to adopt a more optimistic outlook. This rally was further fueled by the Chinese government’s initiatives to bolster tech companies and a new array of AI tools from major firms like Alibaba. According to Charu Chanana of Saxo Markets, the ongoing success in China’s AI sector suggests that its innovation capabilities are more formidable than previously thought, despite US chip export restrictions.
Societe Generale has characterized the Chinese cohort based on market capitalization and growth potential, which consists of Xiaomi, BYD, Semiconductor Manufacturing International, JD.com, and NetEase. This group is currently trading at 18 times forward earnings, marking a significant valuation discount (over 40%) compared to the Magnificent Seven stocks.
The Hang Seng Tech Index has gained more than 1% recently, summing up to a 10% increase for the week, reaching levels not seen since late 2021. While Chinese stocks are revitalizing, US equities are facing multiple challenges, including trade policies under President Trump that are instilling uncertainty among American businesses and consumers.
The prolonged growth of US tech stocks, particularly Nvidia, has encountered hurdles as investors recalibrate their expectations regarding longstanding elevated valuations. Concerns about a potential downturn appear to further incentivize a shift from US-focused investments toward Chinese options, despite the historical underperformance and increasing geopolitical tensions in China.
In conclusion, the favorable conditions surrounding Chinese tech stocks, such as government backing and recovering earnings alongside the strong growth potential in AI, position China as an appealing alternative for investors wary of US stock valuations. Vey-Sern Ling from Union Bancaire Privee emphasizes that the structural growth drivers present in China are pushing a rotation of investment focus from the US to Europe and China, especially in light of recent earnings disappointments in the US tech sector.
Chinese tech stocks show strong momentum following a significant rally of $439 billion, surpassing the performance of US tech counterparts facing challenges. The rise of China’s leading tech firms is buoyed by government support and innovative advancements, especially in AI. Despite the risks and historical underperformance, investors view China as a compelling alternative to US equities overshadowed by concerns over lofty valuations. As the landscape evolves, ongoing developments in the sector will be crucial for investment decisions.
Original Source: news.az
