China’s AI Stock Boom is Outpacing the U.S., But Can it Last?
Chinese chip and tech stocks are posting triple-digit gains as Beijing fuels an AI boom, but rising valuations are testing investor patience.
• Chinese semiconductor shares are up 55% since June, compared to 20–30% gains in the U.S., Japan, and South Korea.
• MSCI China Index is up 40% year-to-date, outpacing the S&P 500’s 15%.
• Government-backed initiatives and local chip bans have pushed investors to bet on domestic AI hardware and infrastructure.
The world’s attention has been on Silicon Valley’s AI race, but the biggest market moves are unfolding thousands of miles away. China’s AI and semiconductor shares have surged more than 55% since June 2025, outpacing gains in Japan, South Korea, and even the United States.
Behind the rally lies a mix of national ambition and investor optimism. Beijing’s push for tech self-sufficiency has turned AI into a national project, urging data centers to favor homegrown chips over Nvidia’s. Companies like Huawei and Alibaba have raced to meet that call, while Semiconductor Manufacturing International Corporation (SMIC) is testing its first locally built advanced manufacturing tools, a milestone in China’s effort to build a fully domestic chip supply chain.
So far, that bet's been paying off. Cambricon Technologies, often dubbed “China’s Nvidia,” has jumped 400% this year and trades at nearly five times Nvidia’s valuation multiple. SMIC has risen 180%, Alibaba 120%, while Tencent, Baidu, and Xiaomi have all gained around 60%.
This wave of optimism is also lifting the broader market. The MSCI China Index is up 40% this year, compared with 15% for the S&P 500, while the Shanghai Composite and CSI 300 have climbed 18% and 20% respectively. Tech is once again the heartbeat of China’s market, echoing the dominance of Nvidia and Microsoft on Wall Street.
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- Why China’s biggest delivery app is betting $1 billion on Brazil
- The U.S. government is getting a cut from Nvidia and AMD's AI chip sales to China
- While the World Catches Up to 5G, China Has Launched 10G
The rally everyone’s chasing
On paper, these gains look like a triumph of innovation. But look closer, and the numbers tell a more complicated story.
