4 Stocks From the Tech Industry of China to Keep an Eye On in 2H25

Globe and Mail

2 days ago

China's technology sector is likely to demonstrate remarkable resilience in the second half of 2025, transforming global trade pressure into catalysts for indigenous innovation. Despite facing 145% U.S. tariffs and export restrictions on advanced semiconductors, Chinese technology companies, including NetEase NTES, Alibaba BABA, Taiwan Semiconductor TSM and Tencent Holdings TCEHY, have strategically pivoted their investments toward AI infrastructure and emerging technologies that rival Western counterparts. Taiwan Semiconductor has confirmed that while tariffs create some impact, AI demand remains robust and consistently outpaces supply, demonstrating China's tech ecosystem strength.
DeepSeek's emergence as a global AI leader exemplifies this transformation, with the Hangzhou-based startup's R1 and R2 models proving that world-class AI can be developed using cost-effective architectures. Chinese e-commerce giants Alibaba and JD.com recently showcased remarkable momentum during the 618 shopping festival, with electronics and home appliance sales surging 283% and 380% respectively, driven by government subsidy programs, demonstrating strong domestic consumption recovery.
Breakthrough Technologies Drive Market Leadership
Huawei Technologies continues its impressive comeback with the upcoming Pura 80 smartphone series set for launch on June 11, featuring the advanced HarmonyOS Next operating system that operates independently from Google's Android platform. This represents a significant milestone in China's software sovereignty, while Huawei's Kirin chipsets demonstrate competitive performance against international standards. Industry analysis shows Huawei's Kirin 9020 chip offers 14% higher memory bandwidth compared to Apple's A18 processor, highlighting China's advancing semiconductor capabilities.
China's semiconductor industry has strategically dominated advanced packaging technologies, capturing over 25% of the global market share and more than 50% in advanced packaging segments. Technologies like 2.5D and 3D stacking enable enhanced chip capabilities at relatively low costs, demonstrating China's ability to leverage alternative technological approaches to achieve superior performance.
Strategic Positioning for Future Growth
The robotics sector showcases China's engineering excellence, with Unitree Robotics unveiling sophisticated humanoid robots featuring 43 joint motors. China's electric vehicle ecosystem has been strengthened by companies like Zeekr and Great Wall Motor, while suppliers like Hesai reduced lidar costs from $80,000 in 2017 to approximately $200 in 2025.
Beijing-based augmented reality companies Xreal and Rokid have introduced sophisticated AR solutions with expansive field views and real-time multilingual translation capabilities. These comprehensive technological advances reflect China's successful strategy, establishing leadership across multiple high-tech sectors while maintaining competitive advantages.
We believe that rapid advancements in Chinese technology and huge spending on its development efforts offer significant growth opportunities for investors. Our China Tech Screen is an invaluable source for identifying stocks with massive growth prospects in the space.
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4 China Tech Stocks to Watch Right Now
NetEase presents a compelling investment opportunity for the second half of 2025, driven by exceptional financial momentum and a robust game pipeline. The company delivered outstanding first-quarter 2025 results with gaming revenues surging 12.1% year over year to RMB24.0 billion and net income jumping 35% to RMB10.3 billion, demonstrating strong operational leverage.
NetEase's diverse portfolio continues to gain traction globally, with Marvel Rivals topping Steam charts, Where Winds Meet reaching 30 million players and multiple titles ranking among top sellers. The upcoming catalyst-rich pipeline includes Sword of Justice's global expansion (already achieving 40+ million players in China), MARVEL Mystic Mayhem to be launched on June 25 and innovative titles like Planet Party Time.
NetEase's technological differentiation through AI-powered NPCs and NVIDIA ray tracing partnerships, combined with fair monetization models, positions the company to capture market share. With a strong balance sheet holding RMB137 billion in net cash and multiple high-potential launches scheduled for the second half of 2025, this Zacks Rank #1 (Strong Buy) company offers attractive risk-adjusted returns for growth-oriented investors. You can see the complete list of today's Zacks #1 Rank stocks here.
Alibaba 's fourth-quarter fiscal 2025 results demonstrate remarkable operational efficiency, with non-GAAP earnings surging 23% year over year to $1.73 per ADS, significantly beating estimates by 16.89%. Alibaba's strategic "user first, AI-driven" approach is yielding impressive results, particularly in its Cloud Intelligence segment, which posted 18% revenue growth while AI-related products maintained triple-digit growth for seven consecutive quarters.
The company's robust financial position, highlighted by $50.5 billion in net cash and $16.5 billion returned to shareholders in fiscal 2025, underscores management's confidence and commitment to value creation.
Trading at attractive valuations relative to peers despite its technological leadership and expanding AI capabilities across diverse industries, this Zacks Rank #3 company warrants close monitoring for optimal entry points as market sentiment potentially improves in the second half of 2025.
Taiwan Semiconductor continues to lead the global chip foundry market, and it's benefiting heavily from the AI revolution. Its manufacturing dominance and scale have made it the go-to partner for advanced chipmaking. Whether it's NVIDIA, Marvell Technology or Broadcom, many top chip designers rely on TSM for producing custom AI accelerators and graphics processing units (GPUs).
The company kicked off 2025 with excellent first-quarter results. Revenues surged 35% year over year to $25.53 billion, and net income rose 53% to nearly $11 billion in the first quarter. This growth was powered by the booming demand for its advanced 3nm and 5nm nodes, which now account for 58% of total wafer sales.
Taiwan Semiconductor plans to ramp up capital spending to between $38 and $42 billion in 2025 to further capitalize on the AI-driven growing demand for advanced chips. This is a sharp increase from the $29.8 billion spent in 2024, with around 70% earmarked for advanced manufacturing capabilities. Despite higher energy prices in Taiwan, softness in key markets like PCs and smartphones and escalating geopolitical tensions, this Zacks Rank #3 company is worth a watch in the second half of 2025.
Tencent reported strong first-quarter results, delivering RMB180 billion in revenues (+13% year over year) with non-IFRS operating margins expanding to 39%, demonstrating operational excellence. Gaming division momentum has significantly accelerated with domestic games surging 24% year over year while Delta Force achieved remarkable success, reaching 12 million peak DAU and becoming the sixth most popular mobile game industry-wide.
AI integration is progressing faster than anticipated, with Yuanbao now integrated as a Weixin contact and LLM-powered search driving user engagement, positioning Tencent ahead of competitors in the AI transformation. Marketing Services' robust 20% year-over-year growth reflects the platform's enhanced AI-driven advertising capabilities, while the expanding Weixin ecosystem (1.402 billion MAU) provides an unmatched foundation for future monetization.
With a strong net cash position of RMB90.2 billion and continued shareholder-friendly capital allocation through HKD17.1 billion in first-quarter buybacks, this Zacks Rank #3 company demonstrates both growth and financial discipline. Investors should monitor any market volatility in the second half that could provide attractive entry points.
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