China’s tech sector surged by $439 billion in 2025, outperforming US stocks, which dropped about 10%. The rally of the “7 titans,” boosted by government support and AI advancements, contrasts sharply with challenges faced by US equities. Investors are increasingly considering Chinese markets as valuations for US tech stocks remain high and concerns mount over their sustainability.
In 2025, China’s technology sector experienced a substantial increase, with a $439 billion rally among its major tech companies. This surge has positioned Chinese tech giants, referred to by Societe Generale SA as the “7 titans,”—including Alibaba Group and Tencent Holdings—well ahead of their US counterparts, which have suffered, with some indices reflecting a drop of around 10%.
The turnaround in fortunes has surprised Wall Street, especially after a robust performance earlier in the year by the Nasdaq index, which was nearing record highs. Market sentiment shifted dramatically when DeepSeek introduced advancements in AI, challenging preconceived notions regarding China’s technological advancement amid its regulatory tightening and sluggish consumption recovery.
Optimism has returned to Chinese tech stocks, which were previously seen skeptically. This renewed confidence is bolstered by Beijing’s enhanced support for tech firms, alongside innovative AI tools launched by major companies such as Alibaba. Charu Chanana, chief investment strategist at Saxo Markets, mentions, “The DeepSeek success… has reminded the world that China’s innovation prowess should not be underestimated.”
The Chinese tech cohort, which also includes companies like Xiaomi, BYD, and JD.com, now trades at an 18 times forward earnings ratio—over 40% cheaper than the Magnificent Seven, according to Frank Benzimra’s report from February 28. This attractive valuation juxtaposition has further fueled interest in Chinese equities, which are gaining traction as the Hang Seng Tech Index shows improvement.
Contrastingly, the outlook for US stocks has become more precarious, with President Trump’s tariffs contributing to an unstable trading environment. The previously unshakeable belief in the unstoppable ascent of US equities is now under scrutiny, particularly as concerns over high valuations among tech stocks, notably Nvidia Corp., begin to surface.
Despite optimism surrounding Chinese tech, there are still challenges. The Hang Seng Tech Index, while improving, remains approximately 40% below its 2021 peak, indicating a long-term trend of modest returns compared to the Nasdaq 100’s impressive rally. Nevertheless, Vey-Sern Ling of Union Bancaire Privee indicates that the necessary conditions for China’s tech sector to outperform are present, highlighting the potential for an investment shift from the US to China due to adverse valuation pressures in American markets.
The Chinese technology sector has seen significant growth in 2025, surpassing its US counterparts amidst shifting market conditions. With government support and innovative advancements in AI, Chinese tech stocks are rapidly gaining investor confidence. In contrast, US equities face challenges due to high valuations and macroeconomic uncertainties. This evolving landscape may drive capital towards Chinese markets, presenting new investment opportunities despite inherent risks.
Original Source: news.az
