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5 Chinese Companies Soaring with the AI Rocket

Who needs Nvidia?

Author

James Yeo
October 09, 2025

There’s a rocket in China - Artificial Intelligence (AI)

It came over from the U.S., but launched by DeepSeek.

Chinese AI-related stocks have been on a tear lately. And they show no signs of slowing down. There are several factors that are driving this trend

  • DeepSeek’s continued release of its AI models that could integrate local AI chips (without Nvidia)

  • Reliance of many big internet companies on AI to create their own models to drive sales and profits.

  • Increased foreign investor interest in the Chinese markets

The 5 Companies We Are Looking At

1. Alibaba $BABA ( ▼ 0.12% )  

Alibaba or most commonly called, Baba is an online and mobile marketplace for business to sell and customers to buy products and services.

  • Alibaba has three main segments - China E-Commerce (56% of revenue). International Digital Commerce (14%) and Cloud Intelligence (13%)

  • It also operates other smaller segments such as Freshippo, Cainiao, Alibaba Health, Hujing DME, Amap, Intelligent Information Platform, Lingxi Games, and DingTalk.

The company has been at the forefront of the AI talk in China, with share price gaining by 119% for 2025.

Its in-house AI model, Qwen, is a big part of its strategy to drive higher sales in all its business segments.

Financially, Alibaba might be at its current peak now, but could be poised for another one in the coming years.

  • Revenue grew by 4.8% to HKD1.1 trillion in 2024. In the latest quarter, revenue is only up by 1.8%.

  • However, its efficiency is going through the roof. Profits grew by 60% in 2024 to HKD140 million. Net profit margin rose to 13% in 2024 from 8.5% in 2023.

Alibaba is currently trading at a low dividend yield of 1.1% and a price-to-earnings ratio of 22 times.

  • It is currently focused on reinvesting its profits back into its AI segments with a low dividend payout ratio of 14%.

It has a target price of HKD188 with a potential upside of +4.0%.

2. Cambricon Technologies

Cambricon Technologies makes and sells core processor chips for cloud servers, terminals and robots. It is one of the few Chinese chip makers that is gaining an edge.

  • Its core business is Cloud Products where it makes up 99% of its revenue.

  • Most of its business is in China at 99.9%.

Cambricon gained investors’ notice in August 2025 as it was

  • The first listed AI chips company in China.

  • U.S. was initiating sanctions on China in buying advanced AI chips.

  • Stands to benefit from Chinese government policy to support the local chip companies

Cambricon really blew up when it announced its revenue grew by 4,000% for 2Q 2025

In terms of profitability, Cambricon has managed to turn into a profit for 3 quarters now as it has suffered losses for 5 straight years.

Is is currently trading at a ridiculous PER of 496 times with no dividends.

Target price is set at CNY1,626 with an upside of +22%.

Baidu is an internet company that provides internet search and online marketing solutions.

  • Its main revenue segment is its Baidu Core (79% of revenue) which consists of Baidu search and its applications. The remaining one is IQiYi.

  • All of its business is in China

Baidu, as a search engine primarily, has a lot to gain from AI technology. And it has been aggressively expanding its chip and computing business to complement its AI and Language training models.

It has also recently announced its Ernie X1.1 AI model, which reportedly outperforms DeepSeek’s R1-0528.

Baidu needs its AI investments to bear fruit in the long-term. Its financial performance has suffered recently.

  • Revenue was down by 3% in 2024. Latest quarter was also down by 3.6%.

  • However, its profits have grown by 11% for 2024.

Baidu is currently trading at an attractive PER of 13 times compared to its historical average of 27 times.

Market analysts have the company at a target price of KHD129.5 with a downside of 7%.

4. Tencent $TENCENT ( 0.0% )  

Tencent - the biggest company in China. It provides online advertising, fintech and business services.

  • Its main business segment is value-added services (48% of revenue), followed by fintech & business services (32%) and marketing (18%).

  • Its business is concentrated in China (90% of revenue).

Tencent’s AI model which is Hunyuan, can be accessed by its customers through its cloud computing business. It enables image creation and text recognition.

It has also incorporated Chinese AI chips into its ecosystems, and might not need Nvidia chips. It provides them with an advantage of circumventing the U.S. and China trade sanctions and tariffs.

Tencent’s financials have been steady over the years.

  • Revenue grew by 4.3% and 6.4% respectively in 2023 and 2024. And that growth has climbed to an average of 12% in 2025.

  • Profits also grew at a healthy rate of 12% to 17% in 2025.

Tencent is trading at a low dividend yield of 0.7% as it is reinvesting its profits also in AI-related projects (dividend payout of 20%).

Meanwhile, PER is at 28 times with a historical average of 21 times.

Target price is at HKD692 with an upside of +2%.

5. SMIC

SMIC makes and sells semiconductor products and is highly plugged into the AI sector’s required chips. It provides foundry, design, manufacturing and testing services.

  • Its main business is wafers (93% of revenue)

  • Most of its business is in China (85% of revenue), followed by the U.S. (12.3%).

SMIC currently has 5nm production capabilities which enables it to supply parts that are needed in the AI supply chain.

  • Most importantly, it is now collaborating with Huawei to make Ascend 910C AI chips that could compete with Taiwan and U.S. chip companies.

It will be the main beneificiary of the ramp-up in demand for AI chips in China, should Nvidia still have problems exporting to the country.

SMIC’s fortunes have rose at a meteoric pace in recent years.

  • Revenue doubled from HKD30.7 billion in 2020 to HKD66=2.6 billion in 2024.

  • However, it suffers from efficiency problems as its profit margins is only at 6.4% in 2024.

It trades at a very high PER of 155 times as investors are rushing into chip companies in China.

Cheers,

James Yeo