JD.com (JD, Financial) saw its stock rise by 5.89% in pre-market trading, reaching $41.92. UBS released a report highlighting the potential of artificial intelligence to enhance the total addressable market (TAM) for companies. The report cites JD's DeepSeek and Qwen 2.5 models as examples of China's capabilities in AI and large language models (LLM).
Chinese internet companies, like JD, are expected to experience structural growth opportunities driven by technological advancements and increased efficiency. This growth potential may support maintaining higher valuation multiples for the industry. Despite these prospects, foreign investors remain underweight in Chinese internet stocks.
The valuation gap between U.S. tech stocks, with a 2025 price-to-earnings ratio of 25, and Chinese tech stocks at 14, suggests that investors should reconsider their stance on Chinese tech equities. Additionally, the upcoming fourth-quarter earnings season is anticipated to be generally positive, potentially serving as a catalyst for further stock appreciation. JD is UBS's top pick in this sector.
