Chinese tech stocks have surged recently due to hype surrounding DeepSeek’s cost-effective AI model. The Hang Seng Tech Index is up 25% this year, while the broader Hang Seng Index has gained around 13%. Gaming giant Tencent’s stock rose nearly 8% after confirming integration of the AI model in its Weixin super app.
Analysts at Goldman Sachs note that DeepSeek R-1 has “altered the narrative” of China tech, citing its globally competitive and cost-effective nature. The company’s AI-driven areas are expected to boost earnings through productivity gains, cost savings, and new revenue opportunities.
However, Goldman Sachs also highlights risks to the rally, including data privacy concerns, industry regulation, Western export controls, and China’s broader economic challenges. They estimate that $200 billion of net buying could be attracted to Chinese stocks, but emphasize the need for forceful policy delivery to soften immediate tariff headwinds.
Despite these concerns, the analysts remain optimistic about AI’s potential for China’s long-term growth outlook.
Source: https://markets.businessinsider.com/news/stocks/goldman-sachs-deepseek-china-ai-tech-stock-rally-different-tencent-2025-2