Alibaba and Tencent stocks lag as investors favor smaller AI firms

In short: China’s AI-related stocks are rising this year, but major tech firms Alibaba and Tencent have not joined the rally.

What's going on

Some Chinese companies linked to artificial intelligence, or AI (computer systems that can write, see, or talk in ways that seem human), have seen their share prices climb sharply in 2026. The Financial Times says China’s CSI artificial intelligence index, which tracks companies in the AI supply chain, is up more than 28% this year.

But big, well-known tech names have moved the other way. Hong Kong’s Hang Seng Tech index, where many large Chinese tech firms are listed, is down more than 8% over the same period. Alibaba shares are down 6.7% this year, and Tencent shares are down 23.7%.

Investors appear worried about costs and competition. The report says some investors think Tencent’s spending on AI could hurt profits in the near term. Alibaba has also faced pressure on profits after an expensive period of discounting and subsidies in online shopping.

The FT also cites concerns that the companies’ large language models (the text engines behind chatbots, like a very advanced autocomplete) are not keeping up with smaller competitors. Portfolio manager Joanna Yang of Ninety One said attention has shifted to “pure AI plays” such as companies focused mainly on these models, including Zhipu and MiniMax. Since their IPOs, the report says shares in Zhipu and MiniMax have risen 622% and 318%.

What to watch

Alibaba and Tencent are reporting earnings, and investors will look for clear signs that AI spending is turning into products and profit. Another key signal is whether their AI models improve fast enough to close the gap with smaller rivals.

Source: Financial Times