China Big Tech Misses AI Rally as Hang Seng Tech Drops 8% and Tencent Slides 23.7%
Updated
Updated · Financial Times · May 12
China Big Tech Misses AI Rally as Hang Seng Tech Drops 8% and Tencent Slides 23.7%
5 articles · Updated · Financial Times · May 12
China’s AI-stock boom has largely bypassed Alibaba and Tencent, with the CSI AI index up more than 28% this year while the Hang Seng Tech index has fallen more than 8%.
Profit worries are driving the split: Tencent’s AI spending is seen pressuring margins, while Alibaba is still absorbing the impact of an expensive e-commerce subsidy war.
Smaller pure-play AI names have captured investor enthusiasm instead, with Zhipu up 622% and MiniMax up 318% since their IPOs as fund managers question whether the internet giants still lead in large language models.
Hardware and chip groups are also benefiting from Beijing’s self-sufficiency push and global AI infrastructure demand, lifting Cambricon 183% in 12 months, Zhongji Innolight 944%, and Hong Kong-listed SMIC more than 67%.
The divergence suggests a broader shift in China’s tech market: foreign interest in Chinese equities is returning, but investors increasingly treat the former internet leaders as “old tech” rather than core AI plays.
Are China's tech giants becoming obsolete, or are they quietly building an AI comeback?
Are US sanctions crippling China's AI or fueling a self-sufficient, long-term rival?
The Great Divergence: China’s Tech Giants Underperform Amid 2025-2026 Global AI Surge
Overview
In early 2026, a clear divergence emerged in the global technology sector as China’s major tech stocks failed to join the strong AI-driven rally seen elsewhere. Despite global investors seeking diversification in Asia and Hong Kong since late 2024, and China’s shift toward innovative, high-value sectors, these capital inflows did not boost the performance of leading Chinese technology companies in AI. Instead, the market experienced a healthy pullback, especially in sectors that had previously exceeded fair values. The heavy concentration of top holdings in funds like the Invesco China Technology ETF also made the sector more vulnerable to volatility from individual stocks.