On February 17, China’s President Xi Jinping hosted an auspicious gathering: Guests hailed from his country’s largest tech companies, including Alibaba, BYD Company, Meituan, Tencent and Xiaomi—five members of a vaunted group known as the “Terrific Ten.”1
China’s tech sector has been under pressure since late 2020, when the government imposed sweeping corporate regulations that would wipe out billions of dollars in equity value. By courting China’s tech cognoscenti, President Xi appeared to be getting serious about revitalizing his economy and restoring investor confidence. The market’s response was exuberant: The Hang Seng Tech Index rallied 35% from its 2025 low on January 13, far outpacing the Nasdaq 100’s 1.5% gain and the Magnificent Seven’s 4.9% decline over the same period.2
Renewed support for China’s tech sector coincides with a series of stimulus measures that, in our view, have helped stabilize key sectors, such as real estate and banking, providing a potentially sturdier foundation for the broader economy and for tech to thrive. We also believe the Terrific 10 stand to gain from surging innovation in AI and robotics. Drones now deliver bubble tea and hamburgers in Shenzhen, while dancing robots captivated audiences during the Spring Festival Gala, watched by over 1-billion people.
Then there’s DeepSeek, the Chinese AI startup that sent shockwaves through the global tech ecosystem by unveiling a powerful large language model that required far less computing power and came at a fraction of the cost of existing GenAI models (for more detail, see Seeking Perspective on DeepSeek).
So where might things go from here?
We believe China’s tech sector may be on the cusp of its own “OpenAI moment,” which triggered a transformative AI investment boom in the U.S. tech sector in 2023–2024. Alibaba, for one, has signaled that it will spend more on capital expenditures, including AI infrastructure, over the next three years than it had over the previous decade.3 And given that western AI models had not been broadly available in China, we also expect DeepSeek’s breakthrough may trigger productivity gains across other sectors, including healthcare, retail and manufacturing.
While some wonder whether the Trump administration’s bans on exporting U.S.-made chips to China will thwart the country’s progress on AI, we believe Trump will more likely use the bans as a negotiating tactic with President Xi. Furthermore, we think the western and Chinese tech ecosystems have already decoupled, and any further restrictions would have limited incremental impact.
Looking forward, we plan to track new tech-related policy discussions coming out of China’s upcoming Two Sessions annual political meetings in March. Meanwhile, as investors debate whether the U.S. Mag 7 can maintain their impressive momentum, China’s Terrific 10 are still trading at valuations significantly lower than their U.S. megacap peers. Given the potential trajectory of tech in China, we believe that disparity could still present an attractive entry point for long-term active investors.
