BOOM: While US stock market IMPLODES, China's STOCKS R SKYROCKETING
China’s New AI Tools Ignite Stock Market Frenzy as Alibaba Soars · Bloomberg
Charlotte Yang and Luz Ding
Thu, March 6, 2025 at 2:31 AM MST 4 min read
(Bloomberg) -- A spate of new artificial intelligence tools from China sparked frenzied trading in the nation’s stock market, propelling an index of technology companies to a multi-year high.
Alibaba Group Holding Ltd. paced the gains on Thursday after unveiling its latest open-sourced AI model. The platform marked a big leap over the previous version, using just a fraction of the data DeepSeek’s R1 employs.
The flurry of AI announcements also included Tencent’s new open-source video model Hunyuan and a similar product from short-video platform Kuaishou Technology. Earlier this week, Manus AI launched what it called a general AI agent, or a bot that can perform tasks, saying its model is performing better than OpenAI’s DeepResearch on some fronts.
While questions remain over the long-term profit potential of AI models, investors show few signs of holding back. Alibaba’s stock surged 8.4% in Hong Kong, boosting an index of Chinese tech shares by 5.4% to the highest closing level since 2021. Kuaishou jumped 16%, the most in more than two years. In mainland China, Focus Technology Co., which has AI agent products, soared by the 10% daily limit.
The gains follow DeepSeek’s AI breakthrough earlier this year, which ignited a bull run for Chinese stocks and sent shockwaves across global markets. The tech sector got another boost this week after China said at the National People’s Congress it would support the extensive application of large-scale AI models and development of new-generation intelligent terminals and manufacturing equipment.
Alibaba in particular has gone on a tear, gaining some $153 billion of market value since a January low. Investors have warmed to the company founded by Jack Ma as it stabilizes a business sideswiped by a years-long government crackdown. Its growing prowess in AI and mounting signs of Beijing’s support helped galvanize its comeback.
“The supportive rhetoric to AI announced at the NPC sets a proper context for Chinese AI innovation to move forward,” said Linda Lam, head of equity advisory North Asia at Union Bancaire Privee. “Looking ahead, we expect a proliferation of open-source AI applications from China and the US, to propel the tech rally globally,”
In the wake of DeepSeek’s emergence, multiple companies have trotted out models and services they claim match the Chinese startup’s or OpenAI, whose ChatGPT is credited with igniting the generative AI boom. The litany of rollouts has captivated both investors and the Chinese public.
READ: Alibaba Leads Competitors Playing Catchup With China’s DeepSeek
Even with the recent surge in tech shares, valuations are still not demanding. The Hang Seng Tech index is trading at around 19 times forward earnings, compared to 45 times four years ago.
“We see a further re-rating happening in the market given how cheap a lot of the China tech stocks look compared to their US peers. Showcasing the enthusiasm is that even some hardware tech names which haven’t really performed earlier are going up,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments.
Alibaba’s latest model is intended to take on both DeepSeek’s R1 and OpenAI’s o1. The new reasoning model is considered efficient at 32 billion parameters, as demand grows for AI that requires minimal data and consumes less computational resources. Parameters are the parts of the AI model learned from the training data, and help adjust its behavior to make more accurate predictions or generate meaningful outputs.
Alibaba has pledged to invest more than 380 billion yuan ($52 billion) on AI infrastructure such as data centers over the next three years, a major commitment that broadcasts the e-commerce pioneer’s ambitions of becoming a leader in artificial intelligence.
That target marks one of China’s biggest AI infrastructure budgets, underscoring Alibaba’s growing ambitions in the field. But it comes at a time investors are pondering whether big tech firms are overestimating future demand for AI services, or the capital needed to create them.
Meanwhile, Manus AI said its AI agent did better than OpenAI’s DeepResearch on some metrics using the GAIA benchmark, designed for assessing an AI model’s ability to handle real-world scenarios.
--With assistance from Saritha Rai, Debby Wu, Jing Jin and Shikhar Balwani.
(Updates prices throughout.) |
