This article first appeared on GuruFocus.
Chinese tech stocks are staging a comeback that’s turning heads across Asia. The Hang Seng Tech Index surged 4.2% on Wednesday, pushing the gauge to its highest level since November 2021 and marking its seventh straight week of gains. Baidu (NASDAQ:BIDU) led the move with a 16% jump, while Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), and SMIC followed closely behind. Behind the rally is a potent combination of renewed AI optimism, rising capital expenditures, and a tentative warming in US-China relations. Analysts at Saxo Markets flagged visible re-acceleration in AI spending across China’s top tech platforms, with companies aggressively rolling out models, robotaxis, and proprietary chipsmoves that could drive faster-than-expected monetization. Goldman Sachs and Arete Research have already begun revising their outlooks upward, citing renewed momentum in cloud and chip divisions.
According to Bloomberg Intelligence, total capex by China’s major internet players could more than double from $13 billion in 2023 to $32 billion in 2025. The capital push is already spilling into bond and equity markets. Alibaba recently raised $3.2 billion through a convertible note offering, while Tencent returned to the offshore bond market for the first time in four years, tapping investors for 9 billion yuan. The latest signal came from a state media report showing China Unicom’s Sanjiangyuan data center is now deploying domestic AI chips, including those from Alibaba’s T-Head unitan update reportedly delivered to Premier Li Qiang during his recent visit to Qinghai. Meanwhile, SMIC shares gained over 7% on news it’s trialing China’s first homegrown advanced chipmaking equipment, raising hopes of progress on local semiconductor autonomy.
Valuation may also be pulling investors off the sidelines. At roughly 21 times forward earnings, the Hang Seng Tech Index still trades below both its five-year average and the Nasdaq 100’s 27x multiple. That gap, coupled with a new wave of AI launches and anticipated remarks from Alibaba Cloud’s upcoming developer conference, has some market participants positioning for continued upside. The backdrop of improved US-China dialoguehighlighted by President Donald Trump’s planned call with Xi Jinping and a framework deal to keep TikTok operational in the USis only adding to the momentum. While the index remains about 70% below its 2021 peak, the sentiment shift could mark the early innings of a broader re-rating story in China tech.
