Hong Kong – While U.S. big tech companies face a slowdown, Chinese technology stocks are making a strong comeback, led by the so-called “Chinese version of M7.” The Hang Seng Tech Index, which tracks major tech stocks listed on the Hong Kong Stock Exchange, has surged 31% this year, significantly outpacing the U.S. Nasdaq Index, which has only gained 1% over the same period.
Chinese Tech Stocks Outperform the U.S. Market
The Hang Seng Tech Index includes the top 30 Chinese tech stocks by market capitalization, mirroring the U.S. Nasdaq in its focus on technology-driven companies. Leading this surge are seven key players: Tencent, Alibaba, Xiaomi, BYD, Meituan, SMIC, and Lenovo—collectively referred to as the “Chinese M7.”
These stocks have posted an average return of 43% in less than two months. Semiconductor Manufacturing International Corporation (SMIC) has risen 70%, while Alibaba has seen its stock price increase by nearly 68%.
“Only Chinese Internet companies can match the U.S. M7 in scale and growth potential,” said Bush Chu, an analyst at Standard Life. “While the U.S. excels at disruptive innovation, China is focused on scaling and optimizing existing technologies at a rapid pace.”
Alibaba Leads AI Boom in China
Alibaba, China’s largest e-commerce and cloud service provider, is a key driver of this market surge. The company has solidified its position in artificial intelligence (AI) by integrating its AI technology into Chinese iPhones, boosting investor confidence.
Alibaba reported a robust financial performance in the fourth quarter of last year:
- Revenue surged 11% year-over-year to 280.2 billion yuan ($39 billion).
- Net profit soared more than fourfold to 46.4 billion yuan ($6.4 billion).
- AI-related sales have seen triple-digit growth for six consecutive quarters.
Alibaba announced plans to invest more in AI infrastructure over the next three years than it has in the past decade. The company’s latest AI model, Q1 2.5-Max, has outperformed competitors like GPT-4o and DeepSeek-V3 in multiple benchmarks, strengthening its position in the AI race.
BYD Dominates the Electric Vehicle Market
China’s leading electric vehicle (EV) manufacturer, BYD, is also experiencing a record-breaking stock rally. The company has announced a strategic partnership with DeepSeek to implement autonomous driving technology across all its vehicles in China.
A recent report from JPMorgan predicts that BYD will become the “Toyota of the global EV market,” highlighting its potential for long-term dominance.
CEO Wang Chuanfu echoed this sentiment in a recent interview, stating, “Chinese EVs are three to five years ahead of global competitors.” According to CNBC, BYD overtook Tesla in pure electric vehicle sales for the first time during the fourth quarter of last year.
Chinese Government Signals Tech Sector Support
Chinese President Xi Jinping’s recent meeting with the heads of major technology firms has further fueled optimism. Notably, Alibaba’s founder, Jack Ma, who had been sidelined after his criticism of the government in 2020, was invited to the forum. Analysts suggest this marks the end of Beijing’s crackdown on the tech sector and signals a more supportive regulatory environment.
“The return of Jack Ma to public engagements is a strong signal that China is shifting from regulatory restrictions to actively supporting its tech sector,” noted analysts at Meritz Securities.
Investment Outlook: China’s M7 Poised for Continued Growth
As global investors take note of China’s tech resurgence, many analysts predict continued momentum. Meritz Securities forecasts that China’s M7 will slightly exceed the U.S. M7 in annual revenue and operating profit growth by 2025.
“We recommend increasing exposure to China’s M7 stocks whenever price corrections occur,” the firm advised in a recent report.
With strong government backing, rapid AI and EV advancements, and impressive financial performances, China’s tech sector appears to be on a trajectory to outpace its U.S. counterparts.
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