Chinese tech stocks lag despite progress for Huawei and DeepSeek

There is a paradox in the Chinese tech world right now. Companies like Huawei and DeepSeek are developing ever better AI chips and models, but it is not rubbing off on share prices. Investors are still most enthusiastic about the American giants.

Figures from Bloomberg Intelligence show that Alibaba stock has fallen around 27 percent in 2026 through mid-September, while Tencent has fallen about 23 percent. In the same period, the big US AI stocks (the so-called "Magnificent Seven," meaning Apple, Microsoft, Nvidia and the like) have risen more than 15 percent. This has created the largest gap between Chinese and US tech stocks in several years.

At the same time, things are actually going well for Huawei technologically. According to the research firm Bernstein, Nvidia's share of the Chinese market for AI chips is expected to fall from around 40 percent in 2025 to just 8 percent by the end of 2026, while Huawei takes over almost half the market with its own Ascend chips. Huawei itself expects revenue of $12 billion from AI chips in 2026, an increase of 60 percent from the year before.

China is also advancing on the software side. In May 2026, the Chinese AI model DeepSeek became the most used model on the OpenRouter platform, measured by how many "tokens" (units of text that AI models process) are handled. Chinese open AI models have now closed most of the gap to the best American models.

Even so, several Chinese companies are disappointing on the bottom line. Alibaba and Baidu have both delivered earnings that were significantly worse than analysts' expectations, while Tencent is doing better with solid revenue growth.

For Danish investors and consumers, this means that even though China lags less behind the US technologically than before, the market remains skeptical about whether the Chinese companies can turn the progress into profit and growth in the same way as their American competitors.