China is a world leader when it comes to technology. The country of 1.4 billion people is home to some of the largest and most innovative technology companies in the world. Chinese tech stocks are some of the most interesting in the sector.
Chinese companies are world-beaters in critically important areas such as cloud computing, artificial intelligence, e-commerce, the Internet of Things (IoT) and self-driving vehicles. There are few cutting edge technologies where China is not a direct competitor of the United States.
Chinese tech companies are getting so big, in fact, that government regulators are actively working to try and reign them in. American investors have access to some of China’s best technology companies as many of them are listed on U.S. stock exchanges.
In this article, we take a look at four of the very best Chinese tech stocks to buy now.
Chinese Tech Stocks to Buy: NetEase (NTES)
Video games are one of the most popular and fastest-growing segments of the technology sector. The popularity of video games has only grown during the global pandemic as people hunkered down and played them online with friends and family for entertainment.
According to market research firm Statista, the worldwide video game market was worth $159.3 billion in 2020 and is forecast to reach $200 billion by 2023. That popularity and growth is great news for Chinese video-game developer NetEase.
NetEase creates online PC and mobile video games that are among the most popular with gamers today. Consequently, NetEase’s revenue rose 25% year-over-year in the final quarter of 2020.
The company’s profit increased 21% from a year earlier in the fourth quarter of 2020 as well. NetEase’s video games are extremely popular in the world’s most populous country and elsewhere in Asia.
Year-to-date, NTES stock is up 13% to around $113 a share. This follows a run-up of 50% in 2020.
Baidu (BIDU)
Baidu is widely referred to as China’s version of Google (NASDAQ:GOOGL). This is because Baidu is a multinational technology company that is primarily focused on Internet-related services but is also involved in a number of other technology ventures ranging from artificial intelligence to electric vehicles.
The company, headquartered in Beijing, even has its own competitor to Google Maps called (what else) “Baidu Maps.”
BIDU stock had an incredible start to the year, climbing 757% between Jan. 4 and Feb. 19, largely driven by news of the company’s push into electric vehicles.
However, since then, Baidu’s share price has pulled back hard, falling 38% to its current level of $212.29 a share. Investors should see a buying opportunity, keeping in mind that the fundamental story of Baidu has not changed and there remains a very bullish case for the highly diversified stock.
The median price target on Baidu stock is $356.06 a share, with a high estimate of $448.51. The median estimate represents a 68% increase from the current share price.
JD.com (JD)
JD.com has had a rough time this year, but it’s important to remember that the e-commerce juggernaut that has drawn comparisons to Amazon (NASDAQ:AMZN) has been among the best performing Chinese technology stocks over the past five years.
Since 2016, JD stock has risen 208% and today trades at $77.83 a share. Like Amazon stateside, JD.com has an extremely loyal customer base with many consumers who only buy products from its expansive online shopping mall.
As with Amazon, the global pandemic only served to drive sales higher at JD.com.
JD.com also remains extremely innovative and keen to offer its customers new products and services. Case in point, JD.com earlier this year announced that it would be the first Chinese company to accept the country’s digital Yuan currency as form of payment on its website.
Analysts continue to like JD stock and many view it as undervalued at its current level. The median price target on the stock is currently $106.61, with a high estimate of $145.30.
The median estimate suggests the potential for about a 37% profit from the stock’s current share price.
Alibaba (BABA)
It’s almost impossible to talk about Chinese technology stocks and not mention Alibaba. The company remains China’s premier technology company with world-leading expertise in e-commerce, fintech, artificial intelligence, cloud computing and the Internet of Things (IoT).
Yet despite its pedigree, Alibaba’a shares have been severely beaten down this year. In fact, BABA stock has been in the dog house with investors so long it has fleas.
Since mid-February of this year, the share price has fallen to $227. Since last October, the stock has plunged 26%.
The reasons for the share price slide are well known.
The rotation out of technology stocks, the Chinese government’s cancellation of the conglomerate’s attempt to spin off its digital-payment business Ant Group in an initial public offering (IPO), and Alibaba Chief Executive Officer Jack Ma’s disappearance from public view all conspired to push BABA stock lower.
Despite the problems, there is still a lot to like about Alibaba and its stock.
The median price target among Wall Street analysts who cover BABA stock is $317.44 a share, suggesting potential growth of 36% from its current price.
The high estimate on BABA stock is $390.64. It should be noted that the low estimate on Alibaba’s stock of $263.22 is higher than the company’s current share price.
On the date of publication, Joel Baglole held long positions in BIDU and BABA.
