Market Insights

Chinese tech giant Alibaba is surging as U.S. peers like Amazon.com and Nvidia sputter.

The Hangzhou-based online merchant and hyperscaler has rallied 74 percent so far this year, according to TradeStation data. That ranks far ahead of major Silicon Valley firms — plus every member of the S&P 500 index. (See the table below.)

Strong results and the successful launch of AI products have helped power the move. BABA announced the release of its Qwen machine-learning models on January 28, lifting prices on heavy volume. Earnings and revenue beat estimates four weeks later, pushing the stock to its highest level in more than three years. It consolidated there for about a month and continued upward yesterday.

Alibaba (BABA), daily chart, with select patterns and indicators.

This time the focus may be on China in general. The Asian country just announced a “Special Action Plan to Boost Consumption.” While details aren’t yet clear, the program will aim to “expand domestic demand in all directions, enhance consumption capacity by increasing income and reducing burdens,” according to Xinhua.

More news is expected at the China Development Forum March 23-24. There have also been reports of a meeting between executives and President Xi on March 28, which could further impact sentiment.

China vs U.S. Tech

The news flow couldn’t be more different on the other side of the Pacific. Apple (AAPL), the biggest U.S. tech stock, just had its worst week in 2-1/2 years after delaying the integration of AI with its Siri personal assistant. AMZN and Microsoft (MSFT) fell on weak guidance after announcing results. NVDA beat estimates, but a weak margin outlook raised concerns about demand and pricing.

Those mixed numbers, following years of outperformance, has caused investors to shift capital from U.S. tech stocks to global markets including China. For example, Warren Buffett recently added to holdings in Japanese investment while calling domestic assets overvalued. JPMorgan strategist Mislav Matejka separately wrote that emerging-market stocks like Chinese technology could outperform if the U.S. economy slows. Europe has also benefited from plans to increase defense and infrastructure spending.

BABA is the largest Chinese technology stock, and the best-performer this year. However others are gaining as well:

• PDD (PDD), the parent of Temu, has climbed about 33 percent this year. There hasn’t been much news, but it announces results on Thursday morning.
• JD.com (JD), a general e-commerce company, is up 30 percent. Its last set of numbers on March 6 beat estimates.
• Baidu (BIDU) is sometimes called the “Google of China” because of its dominant position in search. It’s up 21 percent this year — including a 9.2 percent rally yesterday after announcing new AI models.

In conclusion, BABA is leading a surge in Chinese technology stocks at the same time major U.S. names struggle. Traders looking forward see potential for further positive catalysts. They may also worry about more volatility as established megacap leaders struggle following years of relentless gains — especially with estimates for economic growth and earnings coming down.