2 Chinese Tech Stocks To Consider As US Rally Loses Steam

Tech stocks around the world have been rallying from the depths of pandemic trade with a ferocity that hasn’t been seen since the 90s. US tech firms look to be running out of steam, and it may be time to look overseas for opportunities. China equities may still have sizable upside potential for some of the best-positioned enterprises.

This pandemic has increased the world’s reliance on technology, accentuating the already rapidly digitalizing Chinese economy. Below are 2 stocks that have been given a sizable pandemic tailwind with rallies that still have legs.

My Chinese Picks:

Alibaba (BABA - Free Report)

The fact that the Amazon (AMZN - Free Report) of the East (aka BABA) has not taken off like its western counterpart is baffling. Alibaba controls the e-commerce space (80% market share), as well as its cloud-computing category (roughly 50% market share) in the most populous and soon-to-be largest economy on earth.

Alibaba is valued at less than half of Amazon despite producing substantially wider margins, greater profitability, and having a larger topline growth outlook for the next couple of years.

BABA is a buy today, and 14 out of 14 analysts agree, giving it price targets between $230 and $300 per share (roughly $260 average), a 5 to 37% upside from where it is trading today ($220 per share). As a long-term investor, I would not hesitate to start a position in this revolutionary tech enterprise before it takes off.

NetEase (NTES - Free Report)

NetEase is a leading internet company in China that runs some of the most popular mobile and PC games in the region. The company also operates a rapidly expanding online education platform that ranges from Pre-K to university-level classes and has many other innovative ventures ranging from cloud music to a private label e-commerce brand.

The enterprise saw robust growth in Q1 with stronger than expected gaming sales, and its cloud music segment more than doubled year-over-year. With more than 800 million users, NetEase threatens Tencent Music’s (TME - Free Report) leadership position in the region. Analysts are optimistic about the company’s potential in this category.

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