When the U.S. applied a 10% tariff against China in February, Chinese technology stocks continued to rally. This month, the U.S. doubled the tariffs to 20%. Again, the stocks rose. Chinese electric vehicle firms fared even better.
Zeekr (ZK) gained 26.5% in the last week. Nio (Nio) gained 23.7%, Xpeng (XPEV) added 30%, and Li Auto (LI) gained 6.58%.
Markets are betting that tariffs will embolden Chinese technology firms. The AI boom is accelerating. DeepSeek AI was only the start of many more efficient models coming from the country. Western firms responded by increasing their investments in Nvidia (NVDA) powered AI chips. The valuation for ChatGPT also increased.
Unfortunately, Chinese AI firms are releasing innovative solutions like the general agent “MANUS.” This is an automation solution that is potentially more powerful than that offered by Google (GOOG) Gemini, Meta Platforms (META), Amazon (AMZN), or Microsoft (MSFT).
The enthusiasm lifted shares of Baidu (BIDU) and Alibaba (BABA). Alibaba is developing reasoning models, a video genitor, and cloud-based AI. Alibaba said that its AI reasoning model outperforms OpenAI and DeepSeek.
Your Takeaway
Investors who have losses in S&P 500 and Nasdaq (QQQ) may chase the China technology rally.
This is risky.
Prices rose by 30% in the last week. It could fall just as fast or rally by more. The direction is unpredictable, so investors may want to sit out of this rally.
