China’s seven largest tech companies, often referred to as the “7 Titans,” have significantly outperformed their US counterparts in 2025. An equal-weighted basket of these Chinese tech giants, including Alibaba and Tencent, has surged over 40% this year. This contrasts sharply with the approximately 10% decline experienced by the US “Magnificent Seven” tech stocks, pushing the Nasdaq 100 Index toward correction territory.
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Chinese Tech Stock Performance vs US Tech Stock Performance
This dramatic shift in market leadership was largely unforeseen by Wall Street. Earlier in 2025, the Nasdaq reached record highs, while Chinese stocks grappled with regulatory crackdowns and a slow consumption recovery. However, the emergence of DeepSeek, a groundbreaking AI model, fundamentally altered the narrative. DeepSeek challenged the prevailing belief that China lagged significantly behind the US in artificial intelligence capabilities.
Following DeepSeek’s debut, Chinese tech companies unveiled a wave of innovative AI tools, further fueling the rally. This momentum was bolstered by Beijing’s announcement of increased support for the tech sector.
“DeepSeek, along with subsequent AI models from China, has underscored the country’s significant innovation capacity, despite US chip export restrictions,” notes Charu Chanana, Chief Investment Strategist at Saxo Markets. “Given their current valuation discount, there’s potential for further gains in Chinese AI stocks.”
Societe Generale identified the “7 Titans” as Alibaba, Tencent, Xiaomi, BYD, Semiconductor Manufacturing International Corp (SMIC), JD.com, and NetEase, based on market capitalization and growth potential. As of February 28th, this group traded at a forward price-to-earnings ratio of 18, representing a discount of over 40% compared to the Magnificent Seven, according to SocGen strategists.
The Hang Seng Tech Index, reflecting the broader performance of Chinese tech stocks, surged over 10% this week, reaching its highest level since late 2021.
Hang Seng Tech Index Performance
US vs. China Tech Landscape: A Shifting Dynamic
While the outlook for Chinese equities, previously considered “uninvestable” by some, has brightened considerably, US tech stocks face multiple headwinds. Rising interest rates, inflationary pressures, and concerns about potential overvaluation have contributed to the decline in US tech giants. Conversely, China’s supportive regulatory environment and renewed focus on technological innovation have created a favorable backdrop for its tech sector.
This divergence in performance highlights a significant shift in the global tech landscape. While US companies have long dominated the industry, Chinese tech firms are rapidly emerging as formidable competitors, driven by innovation and government support. The 2025 rally underscores the growing importance of Chinese tech in the global investment arena. This trend suggests that investors may need to reassess their portfolios and consider the long-term implications of China’s technological ascendance.
