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The AI Investing Pulse

February 27th, 2025

In this week’s edition:

1. Analysis - China's AI Stocks Revival – What is Driving the 17% Surge in 2025?

2. Stock Ideas - What’s Happening with Palantir Stock?

3. News - Nvidia Stock Wobbles on Q4 Details, Blackwell Sales Look Strong

4. Startups - AI Startups: 3 Companies Collectively Raise $2.3 Billion

5. Trends - Global AI Market and Key Stats

6. Other News - How to Write the Perfect AI Prompt

China's AI Stocks Revival – What is Driving the 17% Surge in 2025?

China’s stock market has shown strong signs of recovery in recent months, drawing attention from global investors. Following a period of sluggish growth, Chinese AI-driven companies are now at the forefront of a market resurgence, driven by government support, advancements in artificial intelligence, and shifting investor sentiment.

This article explores the factors behind China’s stock market recovery, how AI is driving the re-rating of Chinese stocks, and which key companies are shaping this revival.

Why is China Surging?

After years of economic uncertainty due to pandemic-related slowdowns, regulatory challenges, and geopolitical tensions, China’s stock market has staged an impressive 17% rally in 2025. Several factors have contributed to this resurgence:

1. Government Stimulus & Pro-Market Policies

The Chinese government has implemented tax reductions, increased public spending, and relaxed regulations on technology firms. Additionally, President Xi Jinping’s engagement with tech leaders, including Alibaba’s Jack Ma, has reinforced support for private enterprises.

2. AI Boom & Global Competitive Edge

China has emerged as a major player in AI innovation, positioning itself as a strong competitor to the United States. The launch of DeepSeek AI, a cost-effective alternative to U.S. models, has attracted global interest in Chinese AI technology.

3. Attractive Valuations & Investor Reallocation

With Chinese tech stocks previously undervalued compared to their U.S. counterparts, some investors have viewed them as an opportunity for growth. Hedge funds and institutional investors have been reallocating capital into high-growth Chinese AI stocks.

4. Stock Market Performance

The MSCI China Index has risen 17% year-to-date (YTD), while the Hang Seng Tech Index has reached a three-year high. Chinese tech stocks have also outperformed the S&P 500, with ETFs such as the Invesco China Technology ETF (CQQQ) gaining 23% YTD.

With these factors in play, AI stocks have become a key driver of China’s market recovery. Below is an overview of some of the companies leading the sector’s growth.

The AI Stocks leading the Charge

Alibaba (BABA) – Market Cap: $330B | YTD Performance: +65%

Alibaba has expanded its AI capabilities, investing heavily in cloud computing and launching its Qwen AI model, which has gained traction in enterprise AI solutions. Its cloud division supports AI-driven applications, solidifying its position as a leading player in China’s AI ecosystem.

Baidu (BIDU) – Market Cap: $31B | YTD Performance: +6%

Baidu is at the forefront of AI innovation, particularly in autonomous driving and large language models (LLMs). Its Ernie AI chatbot competes with OpenAI’s GPT models, while its Apollo platform is a leader in self-driving technology.

Tencent (TCEHY) – Market Cap: $587B | YTD Performance: +20%

Tencent utilises AI across gaming, social media, and cloud services. Its Hunyuan AI model enhances WeChat, gaming experiences, and AI-powered advertising, reinforcing its dominance in China’s digital economy.

JD.com (JD) – Market Cap: $64B | YTD Performance: +23%

JD.com integrates AI into supply chains, logistics, and e-commerce operations. Its Spring Dawn Initiative is designed to help merchants reduce costs, while its AI-powered warehouses and drone deliveries enhance operational efficiency.

Meituan (3690HK) – Market Cap: $128B | YTD Performance: +15%

Meituan, China’s leading on-demand services platform is integrating AI to enhance food delivery, travel bookings, and local services. Its AI-powered logistics system optimises delivery routes and improves efficiency, while its smart recommendation algorithms personalise user experiences. 

Qifu Technology (QFIN) – Market Cap: $6.5B | YTD Performance: +10%

Qifu Technology plays a crucial role in China’s expanding AI-driven financial sector. It specialises in credit assessment, risk management, and financial services. Leveraging big data and machine learning, its AI-powered platform enhances loan approvals and credit accessibility for consumers and small businesses. 

Xiaomi (1810HK) – Market Cap: $171B | YTD Performance: +56%

Xiaomi is integrating AI across smartphones, smart home devices, and electric vehicles, enhancing its ecosystem with the AI-powered HyperOS. Its investments in autonomous driving and robotics reflect ambitions beyond hardware, solidifying its role in China’s AI-driven tech landscape.

Challenges and Considerations

While Chinese AI stocks have demonstrated strong momentum, there are still challenges and risks that could influence market performance:

• Regulatory Uncertainty – China’s Personal Information Protection Law (2021) and antitrust regulations continue to shape the operating environment for tech firms.

• Geopolitical Risks – Ongoing U.S. restrictions on semiconductor exports could impact China’s AI development and technological advancements.

• Global Economic Slowdown – Factors such as supply chain disruptions and macroeconomic uncertainty may affect stock market conditions.

China’s AI sector has played a crucial role in the recent market revival, supported by government initiatives, AI innovation, and renewed investor interest. The rise of companies such as Alibaba, Baidu, Tencent, JD.com, and Meituan highlights the sector’s ongoing expansion.

However, as with any rapidly evolving industry, there are risks to consider, including regulatory oversight and geopolitical uncertainties. Staying informed about market developments, policy shifts, and AI advancements will be key to understanding how China’s technology sector evolves in 2025.

_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

TOP AI STOCKS

TOP AI ETFs

AI STOCKS IDEAS 

What’s Happening with Palantir Stock - Opportunity? - Morningstar 

3 Stocks to Profit from AI - The Motley Fool

Amazon - How AI and Quantum Computing Could Skyrocket Prices - Reporteros del Sur

AI STOCKS & ETFs NEWS 

Nvidia Stock Wobbles on Q4 Details, Blackwell Sales Look Strong, for Now - IBD - NVDA late Wednesday beat Wall Street's targets for its fiscal fourth quarter and guided above views for the current period.

US Stocks Look Stuck. What Could Break the Market Out of Its Holding Pattern? - Morningstar - U.S. stock market momentum has slowed in 2025 amid policy uncertainty and economic concerns, despite a 4.6% year-to-date gain.

Watch These Tesla Stock Price Levels as February Slump Accelerates - Investopedia - Tesla's stock has dropped 28% in 2025, with key support at $325 and $265, and resistance at $430 and $489.

Is MicroStrategy the Crown Jewel of Growth Stocks or is AI the Real King? - Jomfruland - Analysis of MicroStrategy's significant growth in the AI analytics sector, assessing whether its success stems from innovative strategies or the influence of AI.

AI STARTUPS

AI Startups: 3 Companies Collectively Raise $2.3 Billion - PYMTS - AI startups are experiencing record funding levels, attracting significant investments due to their innovative potential and strong business models.

Anthropic's $3.5 Billion Funding Round Reinforces AI Ambitions - crunchbase news - Anthropic is set to finalise a $3.5 billion funding round, driving its valuation to about $61.5 billion, with plans to enhance advanced AI models.

Sweden's lovable, an app-building AI platform, rakes in $16M after spectacular growth -  Techcrunch - Lovable secures $16 million in funding to enhance its AI-powered app development platform, which empowers users to create applications without coding.

AI TRENDS

Global AI Market and Key Stats - Tech Informed - The global AI market is rapidly expanding, projected to grow from approximately $638 billion in 2024 to nearly $3.68 trillion by 2034, driven by technological advancements and widespread industry adoption.

Ai Fabric: The Future of Data and AI Architecture - FastCompany - AI fabric revolutionises data integration and AI automation by creating a unified, flexible architecture that supports real-time insights and efficient workflows.

AI Agents in the Workplace - Beincrypto - AI agents are revolutionising workplaces by automating tasks, enhancing productivity, and fostering human-machine collaboration, enabling employees to focus on strategic work.

OTHER

How to Write the Perfect AI Prompt According to OpenAI - Inc.com - Crafting clear, specific, and concise prompts is crucial for effective AI responses. Iterative refinement and avoiding ambiguity can significantly enhance the output quality.

Microsoft Makes OpenAI’s Advanced o1 Model Free for Windows Users - PC World - Microsoft is enhancing its Copilot AI with deep reasoning capabilities, previously a paid subscription feature.

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_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice.}