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When Wall Street’s tech giants tumbled last week on earnings disappointments, China’s tech sector followed them down in Hong Kong trading. But the reason each market fell tells a different story and that could determine where investors put their money next.
The US decline came from companies missing earnings targets and raising concerns about returns on massive AI spending. China’s drop was mostly sentiment spillover and investors rotating their portfolios according to Ding Wenjie, an investment strategist at China Asset Management Co.
That left China’s tech valuations far more attractive, even as Hong Kong stocks entered a bear market.
Hong Kong-listed Chinese tech giants took heavy losses over five trading days. Chip companies Hua Hong Semiconductor fell nearly 15 percent and SMIC dropped around 10 percent. Short video company Kuaishou lost 11 percent, Tencent declined about 9.5 percent, and Alibaba fell more than 8 percent.
Mainland Chinese investors ignored the Hong Kong sell-off. They poured money into Tencent and Alibaba, making them the top two Hong Kong stocks by net mainland buying on Wednesday and Thursday, according to Wind Information data seen by CNBC.
The gap comes down to valuation. The KraneShares CSI China Internet ETF trades at 16 times its price-to-earnings ratio. The mainland China tech innovation-focused KraneShares SSE STAR Market 50 Index ETF trades at 45 times.
Some Chinese tech stocks gained ground. Top performers in the STAR 50 Index included semiconductor materials company SICC, vacuum robot maker Roborock, AI industrial automation firm Supcon, and smartphone maker Transsion. Solar-related names climbed on reports of potential new deals tied to Elon Musk.
Massive valuation gap between US and Chinese tech
US software stocks cratered on fears that AI tools like Anthropic’s Cowork would disrupt their business models. ServiceNow is down 28 percent year-to-date and Salesforce down 26 percent. Chinese tech stocks started 2026 from deep pessimism. “China and Hong Kong enter 2026 from a position of low expectations. Valuations reflect significant pessimism,” Singapore-based Raffles Family Office said in its 2026 outlook.
Raffles increased its China and Hong Kong stock exposure while reducing US large-cap holdings. Despite macro weakness, China’s digital economy and AI ecosystem keep expanding. Earnings expectations in tech remain stable.
Chinese AI companies also work differently. They charge far less for AI services and focus on consumer-facing applications. Beijing keeps pushing for local chip and infrastructure development. Robotaxi operator Pony[dot]ai just announced a partnership with chip maker Moore Threads for autonomous driving technology. Both companies saw their stocks rise.
The future depends whether US tech companies can prove their massive AI spending will generate returns. Until then, investors are betting on China’s cheaper valuations and rapid AI market growth. As Cryptopolitan previously reported, global investors increasingly view Chinese AI as a hedge against expensive US tech valuations. In September, Chinese retail investors drove the CSI 300 Information Technology Index to its highest level since 2015.
The terrifying US spending race
Here’s what should terrify investors in US tech: Alphabet just announced it expects 2026 capital expenditures between $175 billion and $185 billion—nearly double its 2025 spending. Goldman Sachs projects total AI spending by hyperscalers could exceed $500 billion by 2026. Microsoft, Meta, Amazon, and Oracle are all in a similar arms race, each betting tens of billions that their competitors will blink first.
While American tech executives issue increasingly desperate justifications for their spending sprees, Chinese AI companies just did something remarkable: they went public and investors couldn’t get enough.
In early January 2026, MiniMax and Zhipu AI, two of China’s leading AI startups, completed blockbuster IPOs on the Hong Kong Stock Exchange. MiniMax’s shares doubled on debut, closing up 109% and raising $620 million. Zhipu raised $560 million and closed up 13% on its first day. The demand was staggering: MiniMax’s retail tranche was oversubscribed 1,240 times, with investors borrowing HK$148.6 billion in margin financing just to get a piece.
What makes this significant is that both companies beat OpenAI and Anthropic to public markets. The supposed AI leaders in Silicon Valley are still private, still burning cash, still asking for more funding rounds at ever-higher valuations. Meanwhile, Chinese upstarts are facing public market scrutiny, and passing with flying colors.
This isn’t a fluke. Hong Kong is emerging as the global AI IPO hub, with 150 to 200 tech companies expected to list in 2026, potentially raising $300 billion. The Hong Kong Stock Exchange launched a Technology Enterprises Channel specifically to fast-track innovative tech and biotech companies. The message is clear: Asia is building the infrastructure to fund the next generation of AI companies, and investors are responding enthusiastically.
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