China's “Fabulous Four” tech giants—Baidu (BIDU, Financial), Alibaba (BABA, Financial), Tencent (TCEHY), and Xiaomi (XIACF, Financial)—are surging, doubling their market cap to $1.6 trillion year-to-date, while the “Magnificent Seven” U.S. tech stocks have lost $3 trillion in value, according to a note from Bank of America strategist Michael Hartnett.
Tesla (TSLA, Financial) has been the hardest hit, down more than 35% year-to-date, while Meta Platforms (META, Financial) is the only gainer, up over 7%. Meanwhile, Alibaba has soared nearly 70%, leading China's rally. Despite this, U.S. equities continue to dominate in capital inflows, with $123 billion pouring in year-to-date, compared to $14.9 billion in outflows from Chinese stocks.
However, China's market is outpacing the U.S. on a technical basis, trading over 20% above its 200-day moving average, while the U.S. market is up over 2%. Hartnett views 2025 as the “year of international”, favoring China and European stocks over the U.S., citing geopolitical risks and policy shifts as potential catalysts.
