Wall Street Quietly Bets Big on These Chinese Tech Giants
Even with the prospects of the Federal Reserve (the Fed) cutting interest rates in September 2025, economic uncertainty remain. As such, some investors are shifting their attention abroad. One unexpected hotspot? Chinese technology stocks.
The Chinese stock market isn't usually a top choice for portfolio construction, especially now when trade tariff negotiations and other geopolitical tensions are building up in the region. However, that is often the time to start looking for opportunities, before everyone else steps in and the trade becomes overcrowded.
Today, several Chinese tech giants, particularly Alibaba Group (NYSE: BABA) and Baidu Inc. (NASDAQ: BIDU), are starting to look like interesting contrarian plays, offering growth at a discount.
Why China's Stock Turnover Surge Matters
But before pointing out some of the recent optimism, investors should understand what is behind China’s performance recently.
One key indicator drawing investor attention is turnover, i.e., the rate at which stocks are bought and sold. High turnover typically signals strong liquidity and investor interest. In the United States, dominated by semiconductor and artificial intelligence names, turnover hasn’t been that great lately. Complacency appears to have built up in a “buy and hold” approach tied to the growth narrative.
That doesn’t necessarily mean bad news, but retail investors typically prefer to be in markets with high turnover—and Chinese markets are giving them that opportunity.
China's surge in trading activity suggests renewed interest and better short-term price dynamics. It also reflects a broader dislocation between fundamentals and valuations in China's tech sector, creating a much better risk-to-reward ratio.
While U.S. tech growth is slowing, valuations remain sky-high. China's tech companies, on the other hand, are posting robust earnings growth yet trade at historically low multiples.
Analysts Can’t Deny Alibaba’s Upside
Most investors think of Alibaba as a simple e-commerce play, forgetting that this name is also heavily into cloud computing and data center buildout across Asia. With the continent’s middle class expanding rapidly, Alibaba offers not only a great way to play long-term consumer growth in Asia, but also the technological advances and adoption that are expected to take place.
This might be one reason why some Wall Street analysts are revisiting their outlooks. The current consensus rates Alibaba a Buy with a $166.50 price target. Some analysts, like Barclays' Jiong Shao, go further, assigning the stock an Overweight rating and a $190 target, implying a 30% upside from current levels.
Despite a 21.8% rally over the past month, a sevenfold outperformance of the S&P 500, Alibaba remains well below its all-time high of $310. Whether this rally can continue is up for debate, although the technical and fundamental factors suggest it can.
Baidu's Hidden Potential: AI, AVs, and More
With unusual call options trading volume, Baidu represents an alternative technology play in China for retail investors to consider, especially as the digitization of the Chinese economy accelerates. Baidu is often dubbed as China’s Alphabet Inc. (NASDAQ: GOOGL) since it has evolved to be much more than just a search engine.
With a growing portfolio in artificial intelligence and autonomous vehicles, Baidu has taken a page out of Alphabet’s playbook and begun its European expansion into autonomous driving vehicles for ridesharing.
Unusual options activity reflects growing bullishness. Recently, $2 million in call options were bought, suggesting big bets on Baidu’s near-term upside. Prominent institutional investor Primecap Management increased its Baidu holdings by 1.4% in August 2025. Primecap's $1 billion position (3.5% ownership) in Baidu can be seen as a vote of confidence for retail investors to follow.
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