We recently published a list of the 10 Best Performing Chinese Stocks So Far in 2025. In this article, we are going to take a look at where Kingsoft Cloud Holdings Limited (NASDAQ:KC) stands against the other Chinese stocks.
Chinese stocks have rallied in 2025 since the surprising launch of the DeepSeek AI model. The smart and lower-powered LLM AI tool has created a wave in the global AI industry, with the U.S. stock market losing over $1 trillion right after the DeepSeek launch.
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China’s Ready to Embrace the Tech Sector
Chinese stocks have continued their momentum weeks after the launch of DeepSeek as China’s President Xi Jinping recently held meetings with Chinese tech and start-up leaders, indicating a more friendly approach to the sector. According to a Bloomberg report, the meeting included Alibaba co-founder Jack Ma and DeepSeek founder Liang Wenfeng. Ma’s presence was the highlight as investors saw it as a positive sign that Chinese officials were ready to embrace the tech sector. Ma has had a history with the Chinese government for speaking out against regulators, therefore, his presence is considered a symbolic gesture.
According to reports, Jinping has given a green signal to tech start-up leaders to remain competitive and ensured that the government would not impose unwarranted fines.
“The decision to call for such a meeting likely indicates the importance of technology innovation and the contribution of private enterprises to the development and growth of China’s economy. We view the emphasis on internet and tech providing valuation multiple support for China’s internet sector,” Citigroup analysts wrote in a research note, as per Bloomberg.
Despite the Chinese economy facing deflationary headwinds and a struggling property market, Hong Kong’s Hang Seng Index has surged over 15% year-to-date, driven by Chinese tech stocks.
Do Chinese tech stocks hold the potential to deliver a full-year rally driven by the AI boom, similar to the rally U.S. tech stocks experienced in 2024? Well, Chinese companies have the potential, and DeepSeek has proven what Chinese tech start-ups are capable of doing. However, China’s economy is in a very different place from the United States, and regulation can be difficult to predict.
A woman using a tablet to navigate the cloud-based bill payment technology.
Our Methodology
We used the Finviz screener to shortlist 20 companies with a market capitalization of over $300 million. We ranked the 10 best-performing Chinese stocks with the highest returns year-to-date in ascending order of the YTD returns, as of February 19. We have also listed the number of hedge funds holding these stocks as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Kingsoft Cloud Holdings Limited (NASDAQ:KC)
No. of Hedge Fund Holders: 12
YTD Returns: 83.33%
Kingsoft Cloud Holdings Limited (NASDAQ:KC) is focused on providing cloud services to businesses and organizations primarily in China. The growing demand for AI and cloud-based solutions continues to accelerate Kingsoft’s expansion. The company massively benefits from the integration with Xiaomi’s IoT, cellphones, and electric cars. Xiaomi, a company also chaired by KC’s chairman Lei Jun, poached DeepSeek developer Luo Fuli to join Xiaomi’s Artificial Intelligence development team. This news has attracted investors’ attention as the shares continue to surge.
Xiaomi’s strategic plan to integrate AI into its ecosystem favourably placed Kingsoft as a major partner. Xiaomi’s AI development plan will also create a ripple effect on Kingsoft Cloud Holdings Limited’s (NASDAQ:KC) cloud computing business. The company has already demonstrated strong growth in its AI business, which accounted for almost 31% of public cloud revenue in Q3 2024. The company’s strategic collaboration with Xiaomi and other major players positions it to take advantage of the AI saga.
Analysts at UBS are optimistic about Kingsoft’s ability to capitalize on growth opportunities in the cloud service sector, especially in China. They raised the rating on KC shares from Neutral to Buy, citing a positive revenue outlook and margin recovery as key growth drivers.
Overall, KC ranks 3rd on our list of best performing Chinese stocks to buy right now. While we acknowledge the potential of KC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
