Money Flowing Into Chinese Stocks, Especially Alibaba; The Main Event Ahead Is Nvidia Earnings

As the global investment landscape shifts, one region that has been capturing the attention of investors is China. The country's stock market, the second-largest in the world, has been experiencing a significant rally, with Chinese equities gaining traction among foreign financial institutions. This trend is particularly evident in the performance of Alibaba, one of China's most prominent tech giants.

The recent surge in Chinese stocks can be attributed to several factors. Firstly, the Chinese government has been implementing a series of incremental policies and fiscal stimulus measures to support the stock market and boost economic growth. These measures include monetary policy easing, fiscal stimulus, and property market support. For instance, in January 2025, six Chinese government agencies unveiled a plan to encourage medium- and long-term funds to enter the capital market, aiming to increase the proportion and stability of A-share investment in the portfolios of commercial insurance companies (Source: Goldman Sachs Research).

Secondly, the rapid rise of AI firms like DeepSeek has prompted a re-evaluation of Chinese tech shares. DeepSeek's successful launch of its R1 model in January 2025 has grabbed the market's attention and shown global investors China's advantages in tech innovation, driving interest in Chinese equities (Source: Global Times).

Thirdly, the sustained recovery of the world's second-largest economy, China, has boosted investor confidence in its stock markets. Pro-growth policies and incremental measures have contributed to this recovery, leading to improved fundamentals for listed companies and driving a market rebound (Source: Yang Delong, First Seafront Fund).

Lastly, Chinese stocks, including Alibaba, are trading at attractive valuations compared to other global benchmarks. This has made them an appealing investment option for foreign financial institutions, which have been increasingly upbeat on Chinese equities (Source: Morgan Stanley, UBS, HSBC, Goldman Sachs, and Deutsche Bank).

Alibaba, in particular, has been a standout performer in the Chinese stock market. The company's market capitalization is projected to reach US$322.13 billion by 2025, reflecting its strong position in the e-commerce sector and the growing demand for its services (Source: Alibaba Statistics).

As investors continue to pour capital into Chinese stocks, the upcoming earnings report from Nvidia is set to be a major event. Nvidia, a bellwether for AI demand, is expected to report strong earnings growth, driven by the increasing demand for its specialized computer chips that power artificial intelligence systems. Analysts expect Nvidia's third-quarter data center revenue to grow by 112% year-over-year, reflecting the growing interest in AI infrastructure (Source: Nvidia Earnings Report).

Investors should pay close attention to several key metrics in Nvidia's earnings report to gauge the company's performance. These include revenue growth, particularly in the data center segment, the production and demand for the upcoming Blackwell GPU, earnings per share (EPS) and earnings growth, guidance for the fourth quarter and fiscal 2026, and the stock price reaction to the earnings report.

In conclusion, the recent rally in Chinese stocks, particularly Alibaba, is driven by a combination of government support, AI innovation, economic recovery, and attractive valuations. As investors continue to monitor the performance of Chinese equities, the upcoming Nvidia earnings report is set to be a crucial event, providing valuable insights into the broader market sentiment and the tech sector's growth prospects.