3 Chinese Tech Stocks That Are Finally Ready to Surge


  • The Chinese market is full of impressive tech innovators, many of which are going for dirt-cheap as they manage through China’s nasty economic downturn.
  • JD.com (JD): The fallen Chinese e-commerce firm hasn’t looked this cheap in quite a while.
  • NetEase (NTES): The mobile gaming firm looks like a bargain after correcting violently in the past month.
  • Baidu (BIDU): Its generative AI product could be a growth booster in the future. Management’s confident in that.
Chinese tech stocks - 3 Chinese Tech Stocks That Are Finally Ready to Surge

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Chinese tech stocks are a cohort that has been shunned by many investors. Many of these investors have been hurt buying the dip. More descriptively, they were hurt by reaching out to catch the falling knife). Undoubtedly, truly beaten-down Chinese internet stocks may struggle to sustain an explosive rally that brings forth new highs. Chinese internet stocks have lost more than 70% of their value from all-time highs,

The path behind doesn’t quite matter as much for investors as the path that could lie ahead. This is true given potential catalysts unique to specific Chinese firms. You should also consider the magnitude of growth that could be in the cards if China’s economy can power higher again.

Economic contractions happen every now and often. Particularly nasty ones may cause investors to give up on entire geographies or asset classes. Think abouthow many people ditched cryptocurrencies during the great bust of 2022?

If Chinese stocks appeal to you and you’re willing to take heightened risks, perhaps the following Chinese tech stocks are worth considering. These are beginning showing signs of life.

JD.com (JD)

JD.com is a Chinese e-commerce company. Smartphone with JD.com logo on the screen, shopping cart and laptop. JD stock
Source: Sergei Elagin / Shutterstock.com

JD.com (NASDAQ:JD) is a Chinese e-commerce firm that’s seen sales growth really stall in recent years. At writing, the stock is still down over 71% from its 2021 all-time high north of $106.

The company’s first quarter of 2024 saw progress in sales growth, up 7%, and profitability. However, the firm isn’t close to being out of the woods. Margins are taking a hit from investments in operations and forward-looking technologies as a ton of goods hit the digital discount racks.

Furthermore, it’s not going to be easy to navigate a harsh economic climate while fending off strengthening rivals. The most notable rival is PDD Holdings (NASDAQ:PDD), the firm behind Temu.

In any case, I do think so much negativity has already been priced into JD stock already. The stock goes for just 13.48 times trailing price-to-earnings (P/E). That’s too low of a price for a firm that could gain should things go right for a change.

NetEase (NTES)

netease (NTES) logo on a mobile phone screen representing earnings reports
Source: IgorGolovniov / Shutterstock.com

NetEase (NASDAQ:NTES) is a video gaming firm that’s a must-own for investors looking for exposure to the fast-growing mobile gaming market. In China, mobile gaming is big, and such gamers are ready to spend big bucks on everything from in-game cosmetics (or skins) to loot boxes.

At writing, NTES stock is fresh off a nasty fall, now down around 17% from its past-month high of $106 and change. Indeed, quarterly results may have missed the mark, but that’s no reason to give up on the firm as it readies for new games and expansion packs.

The company’s latest 2024 annual product launch event was packed. I have no doubt that such a robust pipeline of content will incentivize many gamers to open up their wallets.

Of course, the gaming market is fiercely competitive. There are so many must-play titles and so little time to enjoy them all to their fullest. At just 13.54 times trailing P/E, NTES stock stands out as one of the cheapest gaming plays on the planet. With this consistency you can see why this is one of the top Chinese tech stocks.

Baidu (BIDU)

An image of a laptop on a table with the screen showing the red and blue logo for Chinese Internet company "Baidu", with the background being blurred.

Baidu (NASDAQ:BIDU) is a Chinese internet juggernaut that’s been “dead money” since its short-lived spike back in late 2020 and early 2021. Since the bubbly move collapsed, it hasn’t been all too rewarding to be a shareholder in BIDU stock. Just because the five-year chart is unimpressive, though, doesn’t mean Baidu is a name to count out, especially while it’s trading for just 14.68 times trailing P/E.

Recently, the stock sunk to fresh 52-week lows below $95 per share. The company is cutting prices on its cloud services, just like fellow Chinese tech titan Alibaba (NASDAQ:BABA). Lower cloud prices are the last thing Baidu needed with sluggish advertising revenues recently posted in its recent first quarter. Still, if Alibaba makes a drastic move, all rivals must follow, or sales could dry up rapidly.

On the plus side, Baidu is betting big on its generative AI model, Ernie. Management is “confident” that AI will be a meaningful driver of earnings over the longer term.

As the chatbot scene gets crowded, though, it’s tough to see how Baidu can differentiate itself. Either way, BIDU stock’s admission price is so low that investors should watch the name closely if they seek AI stocks going for cheaper than most “boring” value plays in the U.S. If you are looking for the top Chinese tech stocks, start with this one.

On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/3-chinese-tech-stocks-that-are-finally-ready-to-surge/.

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