<div id="readability-page-1"><div>[HONG KONG] As Chinaâs homegrown artificial intelligence (AI) boom enters its second year, investors are piling into shares of companies with killer apps in a hunt for earnings that justify surging valuations.Kuaishou Technology has seen its stock climb 24 per cent so far this year as its AI video-generation tool Kling gains traction with global users. Alibaba Health Information Technology shares have surged 33 per cent, helped by enthusiasm for its AI offerings, including a new chatbot aimed at helping doctors diagnose patients.The pair rank among the top gainers on an index of Hong Kong-listed tech stocks, as investors hunt for new winners in the AI rally sparked by DeepSeek.While drivers of the tradeâs early stage included back-end tech firms such as Semiconductor Manufacturing International Corporation, the chase is now broadening to more specialised pockets focusing on user experience. Investors are also looking for companies that are making money.âI think in 2026, the DeepSeek moment will be actually on applications,â said Gary Tan, a portfolio manager at Allspring Global Investments. He sees AI-driven productivity in fields such as the internet, healthcare and software spurring earnings beats for Chinese companies this year.Consensus earnings estimates for Alibaba Health have climbed 24 per cent over the past six months, while those for Kuaishou are up 7 per cent. That compares with a decline of 16 per cent for the Hang Seng Tech Index, as price wars and AI spending weigh on the outlooks for large Internet firms.Both are still seen in growth mode, with AI creating new opportunities. Citigroup analyst John Yung sees Alibaba Health benefiting from higher online drug sales, as AI helps drive traffic from across the Alibaba ecosystem.Kuaishouâs Kling has been âwell-receivedâ, and the increasing usership is boosting the sales outlook, Jefferies Financial Group analyst Thomas Chong wrote in a note on Tuesday. âContinued technological breakthroughs and innovation present upside to revenue,â he added.Chinaâs tech sector has received strong backing from Beijing in the wake of DeepSeekâs R1 model release just a year ago. A string of new listings has also helped drive excitement in the equity market.Two more OpenAI challengers gained the spotlight with successful debuts in Hong Kong this month: shares of Minimax Group have climbed 139 per cent, while those of Knowledge Atlas Technology JSC, better known as Zhipu, are up 74 per cent.DeepSeekâs open-source model produced at low costs âsignificantly lowered the barriers to building advanced AI applications and accelerated the development of Chinaâs broader AI ecosystem,â said Ivy Ng, chief investment officer at DWS.She notes that while the equity market boomed last year, the early stage of AI investment dragged corporate profits. But Chinaâs companies are expected to see much-awaited earnings improvement this year with the help from AI-driven efficiencies.âWe continue to see attractive bottom-up opportunities, particularly in Chinaâs consumer technology sector, where fundamentals are improving and the monetisation outlook for AI-enabled services is becoming clearer,â Ng said. âSelect parts of the market still offer reasonable valuations, allowing for disciplined stock picking.âProfitable app makers are trading more cheaply than some of the more overheated tech segments. Alibaba Healthâs Hong Kong-listed stock is at 34 times estimated earnings for the next 12 months, while Kuaishou is at just 13 times. That compares with multiples of over 100 times for chipmakers Hua Hong Semiconductor and Cambricon Technologies. BLOOMBERG</div></div>

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China's AI stocks are gaining investor interest as companies like Kuaishou Technology and Alibaba Health Information Technology report significant stock price increases, driven by innovative AI applications. Kuaishou's stock has risen 24% and Alibaba Health's by 33% this year, with analysts predicting continued earnings growth due to AI-driven efficiencies. New AI challengers have also debuted successfully in Hong Kong, contributing to a positive outlook for China's tech sector. Despite challenges in the broader market, opportunities remain in consumer technology, with reasonable valuations for profitable app makers.

Chinaâs AI stocks with killer apps are winning investor favour

Chinaâs AI stocks with killer apps are winning investor favour