Chinese internet stocks are showing renewed momentum after a prolonged period of underperformance, supported by improving earnings expectations, signs of policy support and growing optimism around China’s artificial intelligence progress. The rebound accelerated after China’s cyberspace regulator approved Apple 
AAPL, the maker of the iPhone, to introduce Apple Intelligence in China following a two-year wait. The Chinese version will use the Qwen artificial intelligence model developed by Alibaba Group Holding 
BABA, while Baidu 
BIDU has also been confirmed as a partner. The announcement pushed US-listed Chinese technology shares higher, with Alibaba climbing as much as 7.9%.
Investors may view the approval as a sign that Beijing is becoming more supportive of the country’s leading technology companies following years of regulatory scrutiny. As competition with the US over artificial intelligence intensifies, Chinese policymakers appear increasingly focused on strengthening the country’s domestic technology ecosystem. Earnings forecasts for Alibaba and Tencent Holdings, a Chinese internet company, have also stabilized in recent months, providing additional support for the latest rally. However, weak economic conditions, subdued consumer spending and concerns that artificial intelligence could disrupt existing business models continue to pressure valuations across the sector.
Whether the rebound develops into a more durable recovery may depend on both China’s artificial intelligence progress and the strength of the broader economy. Investors are looking for further stimulus after the State Council approved a five-year plan aimed at lifting consumption and targeting 60 trillion yuan in retail sales by 2030, with attention now turning to the Politburo meeting later this month. China’s property market has also shown tentative signs of improvement, as new-home prices declined at a slower pace in June, although excess housing supply and years of falling prices continue to weigh on household wealth and spending. These developments may give investors fresh reasons to reconsider Chinese internet stocks, but the sustainability of the turnaround remains uncertain.
