An updated edition of the Dec. 12, 2025, article.
Chinese technology stocks, including Agora API, Kingsoft Cloud KC, Tencent TCEHY and XPeng XPEV, entered 2026 with strategic momentum as the extended U.S.-China trade détente provides operational stability through November. With tariff rates stabilized at 31% and rare earth export controls suspended for another year, Chinese technology companies are leveraging this window to accelerate innovation across semiconductors, artificial intelligence, electric vehicles, and humanoid robotics, creating compelling investment opportunities for 2026.
Early 2026 developments signal China's technology sector evolution. January witnessed aggressive semiconductor consolidation, while February brought intensified AI competition with multiple flagship model releases. Chinese companies demonstrated remarkable adaptability from cost-effective AI innovations to dominant humanoid robotics deployment, positioning strategic opportunities for investors seeking exposure to China's technological advancement despite persistent geopolitical tensions.
U.S.-China Trade Progress Across Strategic Technology Sectors
Semiconductors: China's foundry consolidation accelerated in January as SMIC pursued a $5.8 billion acquisition of Beijing subsidiary SMIC Jingcheng, while Hua Hong Semiconductor moved to acquire 97.5% of Shanghai Huali Microelectronics for $1.2 billion. These mergers consolidate domestic capacity at mature process nodes where Chinese foundries command over 25% of global capacity. SMIC continued 7nm chip production using deep ultraviolet lithography, while China's 15th Five-Year Plan (2026-2030) prioritizes advanced logic processes, memory expansion, and equipment localization.
Electric Vehicles: BYD's January sales plummeted 30% year over year to 210,051 vehicles, marking the lowest monthly delivery since February 2024. Battery-electric passenger car sales fell 33.6% to 83,249 units as policy shifts reduced subsidies and introduced 5% purchase taxes. Export momentum remained strong at 100,482 vehicles (51.4% increase), supporting BYD's 2026 target of 1.3 million overseas sales. Despite domestic headwinds, BYD solidified its position as the world's leading EV manufacturer with 2.26 million battery-electric deliveries in 2025, surpassing Tesla's 1.64 million.
Artificial Intelligence: Chinese AI advancement accelerated in late January with multiple flagship releases. Alibaba unveiled Qwen3-Max-Thinking on Jan. 27, claiming performance comparable to Claude-Opus-4.5 and Gemini 3 Pro. Moonshot AI released Kimi K2.5 simultaneously, positioning it as the world's most powerful open-source model. ByteDance prepared Doubao 2.0, Seeddream 5.0, and Seeddance 2.0 for February Lunar New Year launches. DeepSeek's anticipated V4 model remained under development one year after R1 achieved GPT-4-level performance at 27 times lower cost. Free AI offerings accelerated adoption across Southeast Asia and Africa.
Humanoid Robots: China commanded 90% of global humanoid robot sales in early 2026, with more than 140 companies producing at scale. Beijing established investment funds exceeding $26 billion since late 2024. Morgan Stanley forecasts sales surging 133% to 28,000 units in 2026, with the domestic market reaching $1.4 billion. UBTech planned capacity expansion to 10,000 units annually, while LimX Dynamics closed Middle Eastern funding rounds for early 2026 shipments.
Other Strategic Sectors: COMAC continued C919 production, targeting 50 units annually. Defense budget reached $249 billion with 7.2% increase. CR450 rail prototypes achieved 400 kilometers per hour. The Medical device market approached $172.9 billion with 33,000+ enterprises. Energy storage capacity exceeded 100GW (59% global share).
Chinese technology companies present compelling opportunities for investors navigating geopolitical volatility through late 2026's trade framework. Our China Tech Screen is an invaluable source for identifying stocks with massive growth prospects in the space.
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Agora demonstrates robust momentum in conversational AI infrastructure with strategic partnerships, positioning the company for accelerated adoption in 2026. The expanded MiniMax collaboration integrates advanced multilingual text-to-speech capabilities across this Zacks Rank #2 (Buy) company's real-time network spanning 200+ countries, enabling production-ready voice agents for call centers, customer service, and multimodal devices. The Sentino partnership launches a Physical AI platform combining memory, emotion, and multimodal expression to power emotionally engaging AI companions for brands and device makers. These initiatives expand Agora's addressable market beyond traditional real-time communication into high-growth AI agent applications. With sustained profitability achieved and operating expenses declining while revenues grow double-digits, Agora's infrastructure-layer positioning captures rising demand for enterprise-grade conversational AI deployments globally. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kingsoft Cloud stands positioned for sustained growth through 2026, driven by accelerating AI infrastructure demand. The intelligent computing cloud business demonstrated triple-digit growth with gross billings surging approximately 120% year over year, reaching RMB782 million in third-quarter 2025. Public cloud revenue expansion of 49% reflects deepening enterprise adoption across strategic verticals. The ecosystem partnership with Xiaomi and Kingsoft Group generated robust revenue growth of 84%, validating platform stickiness. Operational improvements delivered historic profitability with positive operating margins, demonstrating successful execution of a high-quality sustainable development strategy. Continued infrastructure investments in AI cloud capabilities, combined with strengthening demand from both public and enterprise cloud segments, position this Zacks Rank #2 company to capitalize on China's digital transformation acceleration and AI application proliferation throughout 2026.
Tencent's growth trajectory for 2026 strengthens through strategic AI integration and international cloud expansion initiatives announced in recent months. The January partnership with NVIDIA powers the START cloud gaming service, scaling to millions of gamers while establishing a joint innovation lab for game engine optimization and AI applications. The Hunyuan AI model now drives more than 900 internal business scenarios across WeChat, gaming, and advertising, contributing to 21% year-over-year marketing revenue growth and 22.8% gaming revenue gains. CodeBuddy AI assistant generates over half of all new code for 12,000 engineers, cutting development time by 40%. Cloud infrastructure expansion across the Middle East, Asia-Pacific, and Europe markets positions this Zacks Rank #2 company for international revenue diversification. Ongoing share buyback execution demonstrates a strong disciplined capital allocation commitment.
XPeng's strategic transformation positions it for compelling growth in 2026. The launch of the 2026 P7+ flagship across 36 countries, featuring both Super Extended-Range and all-electric variants, expands its addressable market while the production milestone of 100,000 P7+ units validates operational scale. The establishment of localized supply chain teams in Europe and ASEAN, supporting production hubs in Austria and Malaysia, should drive cost reduction and faster delivery times. AI integration across operations, including the VLA2.0 autonomous driving system deploying from March, strengthens technological differentiation. With infrastructure spanning 60 countries and 380 overseas stores reflecting 150%+ annual growth, this Zacks Rank #2 company's global footprint expansion creates multiple growth levers while leveraging 80% of its automotive supply chain partners for robotics and flying cars diversification.
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