Hong Kong – As China’s homegrown artificial intelligence boom enters its second year, investors are rushing into stocks of companies with killer apps, looking for returns that justify soaring valuations.
Kuaishou Technology saw its stock price rise 24% by 2026 as its AI video generation tool Kling gained support from users around the world.
Alibaba Health Information Technology shares rose 33%, helped by enthusiasm for AI products such as new chatbots aimed at helping doctors diagnose patients.
The pair is at the top of an index of Hong Kong-listed tech stocks as investors look for new winners in the deep-seeking-induced AI rally.
The industry’s early leaders included back-end technology companies like Semiconductor Manufacturing International Corporation, but it has now expanded to more specialized areas with a focus on user experience. Investors are also looking for profitable companies.
“I think we’ll see a DeepSeek moment in real applications in 2026,” said Gary Tan, portfolio manager at Allspring Global Investments. He expects AI-driven productivity in areas such as the internet, healthcare and software to boost profits for Chinese companies in 2026.
Alibaba Health’s consensus earnings estimate has increased 24% over the past six months, while Kuaishou has increased 7%. By comparison, the Hang Seng Tech Index fell 16% as price wars and AI spending weighed on the outlook for big internet companies.
Both are still in growth mode, with AI creating new opportunities. Citigroup analyst John Yun sees Alibaba Health benefiting from increased online pharmaceutical sales as AI drives traffic from across Alibaba’s ecosystem.
Jefferies Financial Group analyst Thomas Chong wrote in a Jan. 20 note that Kuaishou’s Kling is “well-received” and user growth is boosting sales outlook.
“Continued technological advancements and innovations have a positive impact on revenue,” he added.
China’s technology sector has received strong support from the Chinese government following the release of DeepSeek’s R1 model exactly one year ago. A series of new listings is also adding to the excitement in the stock market.
Two more OpenAI challengers made headlines with their success in Hong Kong in January. MiniMax Group’s stock price soared 139%, while Knowledge Atlas Technology’s stock price, better known as Zhipu, rose 74%.
Produced at low cost, DeepSeek’s open-source model has “significantly lowered the barrier to building advanced AI applications and accelerated the development of China’s extensive AI ecosystem,” said Ivy Ng, chief investment officer at DWS.
She points out that while the stock market boomed in 2025, the early stages of AI investment hampered corporate profits. However, Chinese companies are expected to see a long-awaited improvement in their profits in 2026 by improving efficiency through the use of AI.
“We continue to see attractive bottom-up opportunities, particularly in China’s consumer technology sector, where fundamentals are improving and the prospects for monetizing AI-enabled services are becoming clearer,” Ng said. “Some areas of the market still offer reasonable valuations, allowing for disciplined stock selection.”
Profitable app makers are trading cheaper than some hot tech sectors. Alibaba Health’s Hong Kong-listed stock has a forward P/E ratio of 34 times over the next 12 months, while Kuaishou’s is only 13 times. This is comparable to semiconductor manufacturers Huahong Semiconductor and Cambricon Technologies, which are more than 100 times more expensive. bloomberg
