Source: Barron's Chinese.
Author: Paul R. Lamonica

While the USA Technology 'Magnificent Seven' composed of $NVIDIA (NVDA.US)$、 $Tesla (TSLA.US)$and Other five Technology stocks is in a difficult position. $BABA-W (09988.HK)$ 、 $TENCENT (00700.HK)$ 、 $MEITUAN-W (03690.HK)$ 、 $XIAOMI-W (01810.HK)$ 、 $JD.com (JD.US)$、$NTES-S (09999.HK)$、 $BIDU-SW (09888.HK)$ 、 $BYD COMPANY (01211.HK)$ 、$GEELY AUTO (00175.HK)$and$SMIC (00981.HK)$The Terrific 10 in Chinese Technology is on the rise.

Some investors may ask if the seven giants in the USA are outdated. Is it now time to focus on Chinese technology stocks?

YT Boon, head of Asian themes at Neuberger Berman, gave a positive answer to this question. First, the emergence of low-cost AI technology developed by DeepSeek has sparked a new wave of AI investment in China, with leading Chinese companies expected to benefit from it. Boon stated, 'After DeepSeek was launched, China welcomed its own OpenAI moment.'

Boon believes that the Chinese government's approach to large technology companies will undergo significant changes due to the rise of DeepSeek. He said, 'The Chinese government sees a way to boost the economy and hopes to see investment in the technology sector, which is a huge shift.'

This means that although Chinese technology stocks have risen significantly this year, their path to revival may have just begun. Most stocks included in the Terrific 10 of Chinese technology have been added. $KraneShares CSI China Internet ETF (KWEB.US)$ So far this year, the increase has exceeded 20%, meanwhile, it has included the ETF of the USA tech "Seven Giants." $Roundhill Magnificent Seven ETF (MAGS.US)$ Down 12%.

Although the Roundhill Magnificent Seven set the largest three-day increase since November 8 of last year in the three trading days ending March 25, this rebound has not dispelled investors' concerns about the "Seven Giants."

Catalyst Funds portfolio manager Charles Ashley believes that there are too many uncertainties surrounding the "Seven Giants," and he also warns that it may not be the right time to Buy into the "Seven Giants" yet. In a report released on March 25, Ashley said, "Currently, I hold a cautious attitude towards the 'Seven Giants.' I am not bearish, but I believe the stock price level has not yet reached a better Buy point."

Meanwhile, many stocks among the top ten technology companies in China remain cheap after significant gains.

Leaders in Search Engine and AI.$Baidu (BIDU.US)$This year's expected PE is only 10 times, while the expected PE of Google's parent company Alphabet is 15 times.$Alphabet-A (GOOGL.US)$ The expected PE is 19 times, and it is also the stock with the lowest expected PE among the "seven giants."

$Alibaba (BABA.US)$In comparison, the expected PE is only 15 times.$Amazon (AMZN.US)$the expected PE is 31.5 times.

The parent company of WeChat $TENCENT (00700.HK)$ has an expected PE of about 18 times, while in contrast, the parent company of Facebook and Instagram$Meta Platforms (META.US)$ The expected PE is 24 times.

Auto Manufacturers of electric vehicles $BYD COMPANY (01211.HK)$ The expected PE is 20 times, far lower than $Tesla (TSLA.US)$ the nearly 100 times PE.

Boon said: "Compared with the 'seven giants' of the US stock market, the valuations of China's 'ten heroes' in the Technology sector are still at a relatively low level."

Rick Pitcairn, Chief Global Strategist at Pitcairn, also believes that Chinese Technology Stocks still have more room for growth due to their more attractive valuations.

On the issue of Trade, Boone expressed that he is not concerned about the possibility of a trade war between China and the USA, as many top technology companies in China rely heavily on Chinese consumers rather than on exporting products to the USA and other countries.

In addition to favoring Alibaba and$BYD Company Limited (002594.SZ)$stocks, Boon also prefers $XIAOMI-W (01810.HK)$ Regarding the stocks, it is stated that XIAOMI-W is $Apple (AAPL.US)$ and Tesla's "hybrid," because the company produces both smartphones and self-driving electric cars. Boone mentioned: "XIAOMI-W has an important growth path, as the company still has its advantages in the domestic market of China, which is a very large market."

FactSet data shows that Wall Street Analysts expect XIAOMI's profits to grow by nearly 25% in the coming years, whereas the annual profit growth expectation for Apple is only 7%.

With cheaper valuations and faster growth rates, $XIAOMI-W (01810.HK)$ stocks are expected to become winners.

Editor/Rocky