Gaotu Techedu Inc. (GOTU) saw its stock soar 5.38% in pre-market trading on Friday, as the Chinese education technology company got caught up in a broader rally of Chinese tech stocks driven by optimism surrounding artificial intelligence (AI) and the country's push for innovation.
The surge in GOTU's shares came amid a broader rally in Chinese tech giants like Alibaba Group Holding Ltd., Tencent Holdings Ltd., and others, collectively known as the "7 titans." An equal-weighted basket of these seven tech heavyweights has gained more than 40% this year, outperforming their US counterparts, the "Magnificent Seven," which have seen a decline of around 10%.
This reversal of fortunes has been driven by the success of DeepSeek, an AI model developed by Chinese internet giant Baidu, which has spurred a broad re-rating of China's technology stocks. Investors are increasingly optimistic about China's AI prowess and the government's plans to step up support for the tech sector, including the application of large language models.
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