Alibaba leads Chinese tech rally with DeepSeek rival launch: What investors need to know

Core Insights - A surge in artificial intelligence (AI) developments from Chinese technology firms has led to a significant rally in the stock market, particularly in the tech sector, with the tech index reaching its highest level in years [1][3]. Group 1: Company Developments - Alibaba Group Holding Ltd. launched its QwQ-32B AI model, which has 32 billion parameters, resulting in an 8.4% increase in its stock price in Hong Kong [2]. - Kuaishou Technology introduced a competing AI video model, leading to a 16% rise in its shares, marking its largest single-day gain in over two years [3]. - Alibaba has added approximately $153 billion in market value since January and plans to invest over 380 billion yuan ($52 billion) in AI infrastructure over the next three years [7][8]. Group 2: Market Trends - The broader Chinese tech index surged by 5.4%, reaching its strongest level since 2021, with AI-related firms in mainland China also experiencing significant gains [3]. - Despite the recent gains, Chinese tech stocks are still considered undervalued compared to U.S. counterparts, trading at around 19 times forward earnings [9][10]. Group 3: Government and Policy Support - The Chinese government has reiterated its commitment to supporting AI development during the National People's Congress, focusing on large-scale AI models and next-generation applications [4][5]. - This supportive policy environment is expected to foster further innovation in the AI sector in China [5]. Group 4: Competitive Landscape - The competitive landscape in China's AI sector is intensifying, with firms like Manus AI claiming advancements over global peers such as OpenAI [11]. - Chinese AI firms are focusing on creating powerful and resource-efficient models, emphasizing efficiency and minimal data usage as key differentiators [12].