A wave of artificial intelligence (AI) developments from Chinese technology firms has triggered a buying frenzy in the nation’s stock market, sending an index of tech companies to its highest level in years.
Leading the surge, Alibaba Group Holding Ltd. unveiled its latest AI model, while other major players, including Tencent and Kuaishou Technology, also introduced new AI tools.
Alibaba’s unveiling of DeepSeek contender leads surge in tech stocks
Alibaba’s announcement of its QwQ-32B AI model, an open-source tool that significantly advances its previous version, fuelled an 8.4% surge in its stock price in Hong Kong.
The QwQ-32B model, which boasts 32 billion parameters, is positioned to challenge DeepSeek’s R1 and OpenAI’s offerings.
Kuaishou Technology, which launched a competing AI video model, saw its shares skyrocket by 16%, marking its biggest single-day gain in over two years.
The broader Chinese tech index surged 5.4%, reaching its strongest level since 2021.
The rally also extended to AI-related firms in mainland China.
Focus Technology Co., which develops AI-powered agent products, hit the 10% daily limit, reflecting investor enthusiasm for the sector.
Government reiterates support to AI development at National People’s Congress
The latest AI boom was further reinforced by policy signals from Beijing.
At the National People’s Congress (NPC), the Chinese government reiterated its commitment to supporting AI development, with a focus on large-scale AI models, intelligent manufacturing, and next-generation AI applications.
“The supportive rhetoric to AI announced at the NPC sets a proper context for Chinese AI innovation to move forward,” said Linda Lam, head of equity advisory North Asia at Union Bancaire Privee.
“Looking ahead, we expect a proliferation of open-source AI applications from China and the US, to propel the tech rally globally.”
The AI-driven surge mirrors the effect of DeepSeek’s AI breakthrough earlier this year, which set off a bullish run in Chinese stocks and sent ripples across global markets.
With multiple firms rolling out advanced models and AI services, the competitive landscape in China is heating up.
Alibaba’s ambitious AI investment plans
Alibaba has been one of the biggest beneficiaries of the AI-driven market rally, adding approximately $153 billion in market value since its January low.
The company has stabilized after a prolonged government crackdown and is now leveraging AI to drive its recovery.
To solidify its AI leadership, Alibaba has pledged to invest more than 380 billion yuan ($52 billion) over the next three years in AI infrastructure, including data centers.
This ambitious investment plan positions Alibaba as a key contender in China’s AI race.
Tech stocks remain attractively valued
Despite the significant gains, Chinese tech stocks remain relatively undervalued compared to their US counterparts.
The Hang Seng Tech Index is currently trading at around 19 times forward earnings, a stark contrast to its 45 times multiple from four years ago.
“We see a further re-rating happening in the market given how cheap a lot of the China tech stocks look compared to their U.S. peers,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments in a Bloomberg report.
“Showcasing the enthusiasm is that even some hardware tech names which haven’t really performed earlier are going up,” he said.
Chinese firms seek to outpace global peers
As competition in AI intensifies, Chinese firms are seeking to outpace global counterparts.
Manus AI recently claimed its general AI agent outperformed OpenAI’s DeepResearch in some areas, highlighting China’s growing expertise in artificial intelligence.
Alibaba’s QwQ-32B model, which boasts 32 billion parameters, is positioned to challenge DeepSeek’s R1 and OpenAI’s offerings.
With efficiency and minimal data usage as key differentiators, Chinese AI firms are focusing on creating models that are both powerful and resource-efficient.
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