Tech Stock Shakeup: Chinese Rally Challenges US Dominance

Nikolay Stoykov, Managing Partner at Alaric Securities on Euronews  Bulgaria

The recent performance of technology stocks suggests a shift in investor sentiment. While the “Magnificent Seven” tech giants in the U.S. underperformed, older names like Cisco, IBM, and Intel showed solid gains. However, according to Nikolay Stoykov, Managing Partner at Alaric Securities, these gains are unlikely to continue at the same pace.

“I don’t see a long-term rally for these legacy tech giants. The growth we’ve seen has largely been consumed, and the valuations are now fair. Investors should be cautious and selective,” Stoykov commented on Euronews Bulgaria.

Despite the mixed performance in the U.S., Stoykov sees potential in Chinese technology stocks. He believes the recent rally in Chinese tech companies, particularly those listed on the Hong Kong Stock Exchange, like Lenovo and Xiaomi, is just the beginning of a longer-term bull market.

“China’s economy continues to grow despite challenges in the real estate sector. I believe this rally is only starting, and it doesn’t mean there won’t be growth opportunities in the U.S. We could see strong markets in both regions,” he added.

NVIDIA: A Strategic Opportunity Amid Earnings Reports

One of the most anticipated earnings reports is from NVIDIA, a company that has not performed as strongly this year compared to 2024. However, Stoykov believes that the NVDA stock is undervalued, given its growth potential.

However, he acknowledged that external factors could influence investor sentiment. “There are risks, but NVIDIA’s fundamentals are strong, and I don’t see any significant threats to its growth over the next few quarters,” he noted.

Chinese Tech Stocks Rally: Not Just a Local Phenomenon

Stoykov emphasized that the Chinese tech stocks rally is not just a localized event but a sign of broader economic momentum. He sees significant growth potential despite concerns about China’s real estate market.

He favors Chinese companies listed in the U.S., such as Alibaba, Tencent, NetEase, BYD, and Xiaomi, avoiding mid-tier companies or those listed on the Shanghai Stock Exchange.

“I’m selective about where I invest in China. I prefer high-quality, large-cap companies with strong fundamentals. This rally is likely to continue, but I’m cautious about smaller, less established firms,” he added.

Watch the full commentary in the video.

Source: Euronews Bulgaria