Stocks of several of China's most popular technology companies were rallying on Wednesday as the country's leader promised to support the technology industry and kept its economic growth goals intact.

With that as a backdrop, some of China's favorite stocks outpaced the gains of the broader market. Shares of Alibaba (BABA 7.72%) surged 7.7%, JD.com (JD 5.87%) climbed 5.7%, and Tencent Holdings (TCEHY 6.06%) rose 5.3% as of 12:50 p.m. ET. There wasn't any company-specific news fueling the gains, which suggests the comments made by the country's leader helped drive the stocks higher.

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National People's Congress gets underway

The National People's Congress is China's week-long political event and one of the government's most important annual gatherings. To kick off the meeting, Chinese Premier Li Qiang announced support for the country's most important emerging industries, particularly in the technology space. "We will establish a mechanism to increase funding for industries of the future and foster industries such as biomanufacturing, quantum technology, embodied artificial intelligence (AI), and 6G technology," he said.

This show of support was something of a surprise to market watchers and sparked a broad-based rally among China's most widely followed technology stocks. The MSCI China Index, which represents some of the country's most well-known large-cap and mid-cap stocks, jumped 2.7% on the news, helping to stoke investor sentiment. This added to the index's robust performance so far this year, as it has gained 21% since its January low.

Additionally, China kept its economic growth target of 5% intact despite the Trump administration's tariffs and the increasing concerns of a protracted trade war. China's willingness to stand by its projections was taken by market watchers to suggest the country is planning to provide additional economic stimulus, particularly to support ongoing developments in AI and quantum computing.

Chinese AI start-up DeepSeek made headlines in late January with the release of its R1 reasoning model, which it claimed could go head-to-head with OpenAI's o1 model at a fraction of the cost. Many experts have since questioned claims that DeepSeek's model cost just $5.6 million to develop, with recent estimates suggesting it was closer to $1.6 billion.

The advancements were impressive, nonetheless. Nvidia CEO Jensen Huang said the model was "an excellent innovation" and went so far as to describe it as "a world-class reasoning AI model."

Why it matters

So, what does all this mean for our trio of Chinese tech stocks? Plenty, as it turns out.

These companies are widely regarded as AI darlings in China. Alibaba's stock has surged 73% since its low in mid-January (as of this writing). JD and Tencent have also been firmly in rally mode, with the stocks up 41% and 30%, respectively, during the same timeframe. Recent developments suggest there could be more to come.

• Reports emerged that Alibaba is working with Apple to roll out AI features in China.
• JD announced a host of AI-powered enhancements to its JD Cloud offering while providing its cloud customers with free access to many of China's most popular large language models to create their own AI systems.
• Tencent recently released a new AI model that it says rivals DeepSeek's R1 in performance while providing faster response times.

Heading into this year, China's AI tech leaders had lagged many of their U.S.-based counterparts, with Tencent, JD, and Alibaba gaining 41%, 20%, and 9%, respectively, in 2024. However, Beijing signaling support for China's home-grown AI efforts gave investors confidence that this year's tech rally has only just begun.

These stocks are currently selling at compelling valuations. Even after the recent rally, Tencent, Alibaba, and JD.com are selling for 16 times, 12 times, and 11 times trailing-12-month earnings, respectively -- which are reasonable multiples given their potential for future growth, particularly since they appear to have the backing of the Chinese government.

Chinese stocks tend to be a bit riskier, but for investors with the appropriate long-term outlook and an interest in investing in China, now might be a good time to pick up shares of these stocks before they run higher.