Jefferies raises targets on China tech stocks on AI growth

Investing.com -- Jefferies raised its price targets on major Chinese tech stocks on growing impact of AI advancements and cloud expansion.

The brokerage lifted its target for Alibaba Group Holdings Ltd ADR (NYSE: BABA) to $156 from $150 and its Hong Kong-listed shares to HK$151 from HK$145. Tencent Holdings Ltd (HK:0700)saw its target raised to HK$550 from HK$543. Jefferies maintained a "buy" rating on all three stocks.

Jefferies noted Tencent’s integration of AI-powered search through DeepSeek-R1 and Alibaba Cloud’s efficiency gains in AI model training, supported by its recent partnership with Apple (NASDAQ: AAPL). It also pointed to a reshuffling in the AI chatbot sector and Baidu’s ERNIE model expansion.

Chinese internet stocks remain undervalued relative to global peers, with Jefferies raising its valuation multiples on Tencent and Alibaba Cloud businesses based on improved AI-driven growth prospects.

"We view valuation of China internet as undemanding, at below 20x and at a discount to overseas peers," analyst at Jefferies said.

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