This article explores the potential for a bullish turnaround in Chinese tech stocks, driven by undervalued valuations, a recovering economy, and a significant AI breakthrough. It contrasts this with the potential headwinds facing US stocks, particularly in the wake of a possible 'Trump 2.0' scenario.
We're discussing the possibility of a positive turnaround in Chinese stocks (and perhaps even a decline in US stocks) — a view that I believe remains outside the mainstream consensus and contradicts the prevailing narrative in the media and market. To recap, the core argument is that valuations are currently more attractive in China and less so in the US, implying that the market anticipates greater future performance from America compared to China.
Meanwhile, on a macroeconomic level, a potential 'Trump 2.0' scenario may not be beneficial for US stocks in the medium term. This is due to heightened policy uncertainty, a likely contractionary fiscal policy, and significantly higher hurdles stemming from stretched valuations and sentiment compared to Trump's first term in 2017. China, on the other hand, is emerging from a recent recession, and its property market appears to be stabilizing after a protracted and severe downturn. Adding to this positive outlook is the strong likelihood that anticipated tariffs will prompt increased stimulus measures from China. This creates a favorable monetary and macroeconomic environment coupled with relatively low valuations. Now, let's delve into the potential game-changer: China's breakthrough in AI with DeepSeek represents a pivotal moment in altering market perceptions. It challenges the notion that China can only replicate existing technologies and serves as a reminder of the country's vast pool of STEM graduates, hinting at significant potential in the realms of technology and research and development. The reality is that visiting China reveals a landscape of innovation and progress. You witness people striving to improve their lives, and a dynamic system of capitalism and fierce competition. Many Western perspectives on China are outdated or intentionally skewed. The average investor outside of China often lacks appreciation for the dynamism and ambition that characterizes the country. However, returning to the financial aspect, the DeepSeek development not only disrupts the perception of US tech dominance but also highlights the potential for substantial upside in Chinese tech stocks. Unlike the lofty valuations seen in US tech, Chinese tech stocks are currently trading near the lower end of their historical range. Moreover, in recent years, Chinese tech stocks have exhibited stronger growth than non-tech companies during China's cyclical bull and bear markets.In essence, the surprise within the 2025 surprise lies in the possibility that Chinese tech stocks could be at the forefront of a potential new bull market in China. The chart comparing US and Chinese tech stocks illustrates this divergence. Markets often follow price trends more than fundamental analysis, and given the narratives and perceptions discussed earlier, the divergent paths of these stocks are not unexpected. It serves as a prompt to reconsider the potential closing of this gap — whether through China catching up or the US falling behind, or a combination of both. It also reminds us of the unpredictable nature of markets, which rarely move in a straight line.
Technology CHINESE STOCKS US STOCKS AI DEEPSEEK VALUATION MACROECONOMICS TRUMP 2.0 TECH BULL MARKET
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Stock market today: Asian shares mixed as DeepSeek lifts Chinese tech stocksAsian shares Friday were mixed, with Chinese technology stocks rising even as most Asian equities declined. Japan’s benchmark Nikkei 225 dipped nearly 0.44% in early trading to 38,893.65. Australia’s S&P/ASX 200 remained mostly flat, sliding just 0.04% to 8,517.20. South Korea’s Kospi declined 0.23% to 2,530.79. Hong Kong’s Hang Seng rose 1.
Read more »
Stock market today: Asian shares mixed as DeepSeek lifts Chinese tech stocksAsian shares Friday were mixed, with Chinese technology stocks rising even as most Asian equities declined.
Read more »
Chinese app DeepSeek hammers US tech stocks with cheaper open-source AI modelDeepSeek, a new Chinese AI chatbot startup is receiving new attention from Silicon Valley after a surprising launch.
Read more »
US Tech Stocks Tumble After Chinese AI Startup's DemoMajor US technology companies experienced significant declines after a Chinese startup, DeepSeek, showcased a chatbot capable of rivaling OpenAI and Google's offerings at a fraction of the cost. Investors expressed concerns about the potential impact of DeepSeek's technology on the US dominance in artificial intelligence.
Read more »
Tech Stocks Plunge on Fears of Chinese AI DominanceTech stocks experienced a sharp decline on Monday, fueled by concerns that DeepSeek, a Chinese AI firm, has surpassed U.S. technological leadership in AI development. DeepSeek's open-source model, reportedly developed in just two months and costing less than $6 million, has sparked fears that China is rapidly catching up with the U.S. in AI capabilities. Nvidia, a major chipmaker, saw its shares plummet by 13%, leading to a potential market value drop that could be the largest in U.S. stock market history. Other semiconductor companies, mega-cap tech firms, and even power companies linked to AI infrastructure also suffered significant losses.
Read more »
Chinese AI Challenger DeepSeek Shakes Wall Street, Sending Tech Stocks TumblingThe emergence of DeepSeek, a Chinese company with a ChatGPT-like AI model, has triggered a market downturn, particularly impacting US tech giants. Skepticism remains about the long-term impact of DeepSeek's announcement, but the immediate market reaction highlights the risks of concentration risk in stock investing.
Read more »