A wave of artificial intelligence advancements from China is igniting a surge in the nation’s stock market, pushing technology indices to multi-year highs. With industry giants like Alibaba, Tencent, and Kuaishou unveiling cutting-edge AI models, investors are rushing to stake their claims in what appears to be the next frontier of technological dominance.
Alibaba Group Holding Ltd. led the charge, unveiling its latest open-source AI model, which represents a significant leap forward despite utilizing only a fraction of the data required by DeepSeek’s R1. This breakthrough, coupled with Tencent’s newly introduced video model Hunyuan and a similar innovation from Kuaishou, has driven investor enthusiasm to new heights. Meanwhile, Manus AI introduced a general AI agent that it claims outperforms OpenAI’s DeepResearch on certain benchmarks.
The bullish momentum was unmistakable in the markets. Alibaba’s stock soared by 8.4% in Hong Kong, propelling an index of Chinese technology stocks by 5.4% to its highest closing level since 2021. Kuaishou saw an astonishing 16% increase, marking its most significant jump in over two years. On the mainland, Focus Technology Co., a leader in AI agent products, hit the daily 10% upper limit.
DeepSeek’s AI breakthrough earlier this year had already set the stage for a market rally, and the latest developments are amplifying the momentum. The National People’s Congress further fueled confidence by pledging government support for large-scale AI applications, smart terminals, and advanced manufacturing. These commitments signal Beijing’s strategic backing for AI development, reassuring investors of long-term growth potential in the sector.
Alibaba, in particular, has witnessed a remarkable turnaround, adding $153 billion in market value since its January low. The company, once rattled by regulatory crackdowns, is regaining investor confidence as it solidifies its position in the AI revolution. Its ambitious investment plan to allocate over 380 billion yuan ($52 billion) toward AI infrastructure, including data centers, underscores its commitment to establishing itself as a global AI powerhouse.
Despite the rally, valuations remain attractive. The Hang Seng Tech Index is currently trading at around 19 times forward earnings, a stark contrast to the 45 times multiple seen four years ago. This affordability, combined with the rapid pace of AI advancements, has convinced investors that Chinese tech stocks remain an undervalued opportunity compared to their U.S. counterparts. Even hardware-focused tech firms that previously lagged are now benefiting from the broader sector surge.
Alibaba’s latest AI model is engineered to compete directly with DeepSeek’s R1 and OpenAI’s latest offerings. The efficiency of its 32 billion-parameter reasoning model highlights a growing trend toward AI solutions that require minimal data and computational resources. As demand for leaner, more cost-effective AI escalates, Alibaba’s strategic positioning could further enhance its competitive edge.
At the same time, Manus AI’s claim of surpassing OpenAI’s DeepResearch in certain real-world applications further illustrates the aggressive innovation taking place within China’s AI ecosystem. Investors are taking note, recognizing the potential for sustained AI-driven growth and the pivotal role Chinese tech firms are poised to play in the global market.
Alibaba’s resurgence and the broader AI-fueled rally reflect a market that is increasingly optimistic about China’s ability to lead in artificial intelligence. As the sector continues to evolve, the surge of AI applications and infrastructure investments suggests that this is just the beginning of a transformative era for Chinese technology.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
