Chinese tech stocks surged higher despite a hotter-than-expected inflation report, driven by the emergence of DeepSeek, China’s AI chatbot. Alibaba shares rose 4.4%, Futu Holdings jumped 8.4%, and Tencent Holdings increased 3.5%. The news sent shockwaves through major market indexes, which had sold off after January’s inflation data exceeded estimates.
The anticipation of Apple partnering with Alibaba to bring more AI features to iPhone users in China is seen as a catalyst for the sector’s rally. This move will provide Chinese users with AI functionality that meets their specific needs while adhering to China’s strict AI doctrine. The partnership is also a testament to Alibaba’s capabilities, having reportedly been considered by Apple alongside other large Chinese tech companies.
Analysts at Bank of America reiterate a buy on Futu Holdings, citing strong asset inflows and the ability to maintain a gross profit margin of nearly 93%. They project a significant 30% quarterly increase in new paying clients and an 7% rise in total client assets. Tencent Holdings’ surge is seen as a sign that its AI capabilities are also benefiting from more efficient models.
Chinese tech stocks have been trading at cheaper valuations, allowing them to quickly respond to positive news. However, investors need to be aware of the sector’s potential volatility due to economic struggles and government influence. Despite this, companies like Alibaba, Futu, and Tencent have strong growth potential, making them attractive options for investors looking internationally.
Source: https://www.fool.com/investing/2025/02/12/why-chinese-stocks-alibaba-futu-holdings-and-tence