In 2025, China’s tech sector has gained $439 billion, outperforming U.S. stocks. An equal-weighted group of seven major Chinese tech firms, identified as the “7 titans,” has risen over 40%, while U.S. counterparts faced a 10% drop. Factors driving China’s momentum include government support and innovation, while U.S. equities face challenges due to high valuations and geopolitical uncertainties under President Trump.
In 2025, China’s tech sector has experienced a remarkable surge, accumulating a notable $439 billion in value, contrasting sharply with the struggles of U.S. technology equities. An equal-weighted aggregation of seven major Chinese tech firms, termed the “7 titans” by Societe Generale SA, has appreciated over 40%. This elevation stands in stark comparison to a substantial 10% decline in the U.S. Magnificent Seven stocks, contributing to a looming correction in the Nasdaq 100 Index.
The shift in fortunes has taken many on Wall Street by surprise. Earlier this year, the Nasdaq reached record highs, while Chinese stocks languished under the weight of regulatory challenges and a slow recovery in consumer spending. However, the narrative changed with the emergence of DeepSeek, which altered perceptions regarding the pace at which China could rival America’s AI dominance.
The rally in Chinese tech stocks has not only invigorated optimistic sentiments but has also attracted former skeptics. This week saw additional momentum following Beijing’s strategic support for tech firms and the rollout of new AI advancements from Alibaba. Charu Chanana, chief investment strategist at Saxo Markets, noted the significance of these developments, stating, “The DeepSeek success… has reminded the world that China’s innovation prowess should not be underestimated…”.
Societe Generale identifies this group of Chinese tech giants—including Xiaomi, BYD, Semiconductor Manufacturing International, JD.com, and NetEase—by their market value and growth prospects. Presently, this investment group trades at 18 times forward earnings, which is over 40% less than their U.S. counterparts. Additionally, the Hang Seng Tech Index witnessed a more than 1% rise on a recent Friday, culminating in a weekly increase of around 10%.
While Chinese equities see newfound vigor, U.S. stocks face a myriad of challenges. The previous narrative of unwavering U.S. equity strength is being tested amid turbulent trade policies introduced under President Trump, unsettling both businesses and consumers. Moreover, prominent U.S. tech stocks, particularly Nvidia, are under scrutiny as investors increasingly doubt their lofty valuations.
Despite an optimistic outlook for China’s tech sector, it is important to acknowledge the country’s fraught history with sluggish market returns and volatile policies, which may deter some investors. The Hang Seng Tech Index remains 40% lower than its 2021 peak and has a five-year return significantly trailing the Nasdaq 100. Nevertheless, as concerns about U.S. stock valuations mount, China is emerging as a potential alternative investment destination.
Vey-Sern Ling, managing director at Union Bancaire Privee, highlights, “The necessary drivers are there for China tech to outperform… US tech valuations have run up for two years and… are driving a selloff…” This shift suggests an evolving landscape where investors are increasingly considering reallocating assets from the U.S. to Europe and China, amid a rethinking of tech investment strategies.
The dynamics of the global tech sector have significantly shifted in 2025, with China’s tech companies witnessing a tremendous boost, while U.S. stocks grapple with valuation concerns and trade turmoil. Major Chinese firms are buoyed by governmental support and innovations, fostering optimism among investors. As potential returns from U.S. equities decline, many investors may contemplate reallocating their portfolios toward the Chinese tech market, recognizing it as a viable alternative for growth amidst a more volatile U.S. economic landscape.
Original Source: news.az
