Market Pulse: China Tech Rebounds as It Regains Access to US AI Compute
Advanced compute access could reignite innovation and capital flows in Chinese tech
Investors are navigating a complex market landscape characterized by fresh inflation data, earnings apprehension, and high stakes geopolitical maneuvering concerning AI dominance. While the S&P 500 and Dow Jones Industrial Average declined, the Nasdaq has rose, fueled by a significant development: Nvidia is set to resume sales of its H20 AI chips in China, supported by US license assurances. This major policy shift not only boosted Nvidia’s stock by over 4%, reaching record highs, but also generated optimism across the Chinese technology and semiconductor sectors globally. The H20 chip, specifically designed to comply with US export restrictions, is expected to ship as early as August, following months of halted deliveries. Chinese tech firms are eager to access Nvidia’s computing infrastructure to power large language models and remain competitive in the global AI race.
Our Pulse Gauge Indicator highlighted strength in the Chinese tech sector following the H20 announcement. Shares of Baidu surged as investors recognized the company's growing ambitions in AI search and cloud services, which heavily rely on advanced computing. Alibaba and Bilibili also saw gains, as sentiment improved around China's digital economy and content platforms that are likely to benefit from enhanced AI model training. Weibo rallied as well, with investors betting that improved infrastructure access could revitalize advertising and engagement on social platforms. Even Li Auto, which has less direct exposure to AI, recorded modest gains as broader confidence in China’s innovation landscape positively influenced electric vehicles and next generation mobility. This rally reflects renewed investor confidence that access to advanced US chips could reignite growth across China’s most innovative tech sectors.
Market Pulse Action:
S&P 500 decreased 0.40%
Nasdaq increased 0.18%
Dow decreased 0.98%
VIX increased 0.81%
Top Performers on a Chinese Led Day
What to take away:
Baidu Inc (BIDU): Shares surged after reports emerged that Baidu is in talks with Uber to integrate autonomous driving technology into select pilot programs in the US. This move comes as Baidu accelerates its global AI ambitions through its robotaxi platform, Apollo Go, and capitalizes on the momentum from Nvidia’s H20 chip export approval, which could significantly enhance its AI computing capabilities.
Alibaba Group Holdings (BABA): Gained traction amid positive sentiment in the Chinese tech sector, benefiting from a rotation of investor interest back into large cap e-commerce platforms. Analysts highlight improving consumer demand metrics and the stock's undervaluation as potential near term catalysts.
Bilibili Inc (BILI): The video streaming platform experienced renewed institutional buying, reflecting increased confidence in China's youth centric digital sector. Technical indicators also suggest a bullish breakout from a multi-month base.
Weibo Corp (WB): Investors flocked to shares of the social media giant, anticipating a recovery in ad revenue as China's economy stabilizes. This broader movement in Chinese tech positively affected the entire sector.
Li Auto Inc (LI): The EV maker saw modest gains as investors expressed interest in diversified exposure to China. The stock also reacted to news regarding Norway’s successful transition to electric vehicles, which may inspire optimism for global growth.
Year-to-Date Check-in
What to take away:
Baidu Inc (BIDU): Despite experiencing volatility, BIDU is trending upward as China's AI priorities align with its strategic roadmap. Investors are adjusting their expectations as improvements in data center buildouts and software capabilities continue.
Alibaba Group Holdings (BABA): A standout YTD performer, BABA’s rally has been driven by cost cutting initiatives, optimism regarding cloud growth, and favorable macroeconomic data. It is emerging as a bellwether for technological resilience in China. Since its initial mention, the stock has increased by 7.96%.
Bilibili Inc (BILI): The stock has rebounded sharply from significant losses in 2023, indicating growing confidence in its turnaround potential. Its appeal to younger demographics aligns with China's changing digital consumption habits.
Weibo Corp (WB): Positive sentiment is gradually returning, and Weibo's double digit YTD gain suggests it could be a dark horse in the broader recovery of the Chinese market.
Li Auto Inc (LI): YTD return is surpassing that of its automaker peers, backed by strong delivery growth and margin improvements in the hybrid SUV segment. Since its initial mention, the stock has risen by 2.19%.
Looking Back: A Multi-Year Snapshot (2024–2021)
What to take away:
Baidu Inc (BIDU): Long-term underperformance highlights the importance of being selective in investments within the Chinese tech sector. However, the AI race in 2025 may present a crucial opportunity for a turnaround.
Alibaba Group Holdings (BABA): After several years of decline, the stock started to recover in 2024, indicating that the worst of regulatory and macroeconomic pressures may be behind it.
Bilibili Inc (BILI): Has been one of the most volatile names in the sector. Its significant gain in 2024 followed severe downturns, positioning it as a high beta recovery play.
Weibo Corp (WB): Weak long-term performance has been attributed to unstable ad revenue and slowing user growth. However, sentiment could improve if China's GDP growth momentum continues. Over the past four years, Weibo has underperformed its peers, averaging a decrease of 28.32%.
Li Auto Inc (LI): Investor optimism is bolstered by the company's focus on integrating advanced AI features, positioning it well amid the growing demand for smarter, connected vehicles. Over the past four years, it has outperformed all its peers, with an average decrease of only 0.50%.
Why This Matters
Yesterday’s market activity highlights the crucial impact of technology and geopolitics on investment opportunities. Nvidia’s expected resumption of AI chip exports to China indicates a warming in US-China tech tensions and emphasizes the strategic significance of advanced computing in the global AI race. For Chinese tech giants such as Baidu, Alibaba, and Bilibili, regaining access to cutting edge AI infrastructure could boost innovation and revenue growth, reversing years of regulatory and market challenges. Additionally, the positive sentiment spilling over into sectors like electric vehicles, as seen with Li Auto’s gains, illustrates how increasing confidence in China’s tech ecosystem is driving diverse growth stories. As geopolitical dynamics evolve, investors should monitor how access to critical technology assets continues to influence sector leadership and cross border capital flows.