Core Viewpoint - Chinese tech shares are experiencing significant growth driven by advancements in various sectors, including AI, robotics, and flying cars, with notable performance in January 2026 [1][18]. Group 1: Market Performance - An onshore Nasdaq-like tech gauge has increased by almost 13% this month, while Hong Kong-listed Chinese tech firms have risen nearly 6%, both outperforming the Nasdaq 100 [1][18]. - The combined market value of 33 Chinese AI stocks tracked by Jefferies Financial Group has expanded by approximately $732 billion over the past year, with China's AI market capitalization representing only 6.5% of the US's [9][18]. Group 2: Technological Advancements - Enthusiasm for homegrown technologies has been the primary driver of China's equities bull run since April, despite challenges in the housing market and weak consumption [2][18]. - The rollout of a new AI model by DeepSeek and the unveiling of a five-year economic blueprint focusing on technological self-reliance are expected to further support market momentum [2][15][18]. - Chinese firms are accelerating efforts to develop AI models following DeepSeek's success, with generative AI adoption surging among major internet companies like Alibaba and Tencent [5][6][18]. Group 3: Investment Sentiment - Investors are optimistic about the technology sector's prospects due to China's low-cost base and strong state support, with expectations that the release of DeepSeek's R2 model could disrupt the sector again [14][18]. - Recent listing debuts of Chinese AI-related companies have shown significant gains, encouraging more firms to enter public markets [10][18]. - Analysts predict that the next major breakthrough in AI will occur at the application layer, with China well-positioned to lead this evolution due to its diverse user cases [11][18]. Group 4: Valuation Concerns - The rapid rally in tech stocks has raised concerns about stretched valuations, with some companies trading at high multiples, such as Cambricon Technologies at about 120 times forward earnings [13][18]. - Beijing's decision to tighten margin financing indicates growing unease with speculative excess in the technology sector [13][18].

This excerpt originally appeared in the Business Insider Today newsletter.You can sign up for Business Insider's daily newsletter here.Nvidia reports earnings today, which means more questions about AI being overhyped. The company's chips are so critical to AI development that its quarterly reports have become a State of the Union-type event for the tech. And in the three months since Nvidia last checked in, one company has shocked the AI industry: DeepSeek.Business Insider's Emma Cosgrove and Hasan Chowdhu ...