In a shifting landscape of global technology stocks, China's "Terrific 10" is emerging as a formidable contender against the once-dominant "Magnificent Seven." This new group of tech giants includes Alibaba, Tencent, Meituan, Xiaomi, JD.com, NetEase, Baidu, BYD, Geely, and SMIC, all of which are gaining traction as investors look for alternatives amid the struggles of U.S. tech firms.
Published on April 6, 2025, the article highlights the potential of these Chinese companies, particularly in the wake of advancements in artificial intelligence (AI). The development of a language model by the Chinese company DeepSeek is seen as a pivotal moment for the sector, drawing parallels to OpenAI's impact in the United States. YT Boon, head of the Asia department at Neuberger Berman, remarked, "With DeepSeek, China could experience its OpenAI moment," suggesting that this innovation could catalyze significant investments in the Chinese tech landscape.
Despite the impressive performance of some Chinese tech stocks this year, they remain attractively priced compared to their U.S. counterparts. For instance, Baidu's price-to-earnings ratio (P/E) stands at just 10, whereas Alphabet's is 19 and Meta's is 24. Alibaba's P/E is 15, in contrast to Amazon's steep 31.5, while BYD, a leader in electric vehicles, has a P/E of 20 compared to Tesla's staggering nearly 100. Boon noted, "The valuations of the entire group remain low compared to U.S. competitors," according to Barron's.
Additionally, the KraneShares CSI China Internet ETF, which includes many of the Terrific 10 stocks, has seen significant gains in 2025, while the Roundhill Magnificent Seven ETF has struggled. This shift in market dynamics reflects a broader trend of investor confidence moving towards Chinese tech.
Political support is another critical factor fueling the rise of these companies. After years of stringent regulations that stifled growth, the Chinese government is now refocusing on its tech sector to stimulate economic recovery. Boon explained, "Beijing sees this as an opportunity to emerge from a challenging economic situation. They need investments from the technology sector. This is a massive shift." Such backing could usher in a new growth phase for these tech giants.
Among the Terrific 10, Xiaomi stands out as a potential star. Recently, the company delivered around 29,000 electric vehicles (EVs) in March, surpassing its previous monthly figures and closing the gap with rivals like Xpeng and Leapmotor. In contrast, BYD maintained its position as the market leader with approximately 371,000 cars sold, while Tesla experienced a decline, selling only 79,000 vehicles—a drop of 11.5% from the same month last year.
Xiaomi has ambitious plans, aiming to deliver a total of 350,000 electric cars by the end of 2025. This goal underscores the company's commitment to expanding its footprint in the EV market, which it entered last year with the launch of its SU7 model. Reports suggest that Xiaomi may also increase production capacity at its second electric car factory in Beijing, further solidifying its position in this competitive sector.
However, the road ahead is not without challenges. A recent tragic incident involving one of Xiaomi's electric vehicles, which resulted in the deaths of three women, has raised concerns regarding the safety of its driving assistance technology. The exact details of the accident remain unclear, but it has sparked discussions about the reliability of the company's innovations.
As the tech landscape continues to evolve, analysts predict that Xiaomi could benefit from the growing demand for smartphones and autonomous electric vehicles. Boon forecasts a profit growth of 25% for Xiaomi over the next few years, significantly outpacing Apple, which is expected to see only 7% growth. This growth potential, combined with a strong domestic market presence, positions Xiaomi as a key player in the future of technology investments.
In summary, the Terrific 10 represent a significant shift in the global tech investment narrative, showcasing the resilience and potential of Chinese technology firms. With favorable valuations, renewed political support, and groundbreaking innovations, these companies could redefine the investment landscape in 2025 and beyond. As investors weigh their options, the appeal of the Terrific 10 is likely to grow, potentially leading to a new era of technological advancement and economic growth in China.
