Summary of Key Points
In the past few years, there has been a stark contrast in the performance of capital markets for technology companies in China and the United States: The stock prices of major Chinese internet platforms (such as Alibaba, Tencent, and Meituan) have dropped by 40%-85% from their historical highs, while those of American tech giants (like Google, Meta, and Nvidia) have soared thanks to the AI revolution. Even after recent corrections, their two-year gains still far exceed those of their Chinese counterparts. This divergence is not due to a loss of competitiveness on the part of Chinese companies (their revenue and profits are still growing); rather, it stems from five core differences: market saturation, direction of transformation, valuation logic, globalization capabilities, and regulatory environments. The capital markets are using a "new language of the AI era" to reprice these technology companies.
Detailed Analysis
1. Chinese Internet: "The Best Customers Are Already Here"; No Room for Growth
The "golden age" of the Chinese internet was fueled by the "demographic dividend"—attracting more people to the internet and using platforms. However, the current data shows that by the end of 2025, China will have 1.12 billion internet users, with a penetration rate of over 80%, 1 billion mobile payment users, and an average daily online time of 5.5 hours, making it the largest e-commerce market in the world. This means that most potential users have already been reached, leaving no room for new growth. Companies that once relied on acquiring new users to boost performance now have to compete for the time and money of existing users. For example, Meituan and Ele.me are competing for外卖 customers, while platforms like Douyin and Kuaishou are fighting for user attention in the short-video market. The cost of acquiring new users is increasing, and growth rates are flattening. Investors look at "future growth potential," and without additional user growth, these companies are perceived as less valuable.
2. American Tech Companies: Shifting from Platforms to AI Infrastructure Providers
American tech giants have not stuck with their traditional businesses; instead, they have transformed into providers of AI infrastructure. For instance:
- Microsoft has invested in Azure cloud services and Copilot (an AI assistant) to offer AI solutions to companies.
- Google has evolved from a search engine to an AI model training platform.
- Amazon's AWS (cloud services) has become the global environment for running AI applications.
- Nvidia's GPUs are essential hardware for AI computing; without them, AI models cannot function. These companies have spent over $1 trillion on data centers and GPU clusters between 2025 and 2026, not just wasting money, but building the foundation for the intelligent economy. Investors see this as a massive market for the coming decades and are willing to offer high valuations.
3. Changing Valuation Logic: From "Number of Users" to "Infrastructure Strength"
In the past, the valuation of internet companies was based on "number of users multiplied by value per user." With China's large population, Chinese companies had high valuations. However, in the AI era, the new metric is "computing power, ecosystem coverage, and speed of technological innovation." For example, Nvidia does not directly serve end-users, but all AI companies worldwide must purchase its GPUs, making it a cornerstone of the AI economy and contributing to its high global market value. The seven major American tech companies (Google, Meta, Microsoft, etc.) account for one-third of the S&P 500's total market value because investors recognize their role as AI infrastructure providers. Chinese companies, still stuck in the "traffic-based" valuation logic, struggle to achieve similar valuations.
4. Globalization Capabilities: American Companies Generate Revenue from Around the World; Chinese Companies Rely Mainly on Domestic Markets
The United States has a population of only 340 million, but its tech companies serve 6 billion internet users globally. Google's search services are used in over 190 countries, and Meta has 4 billion monthly active users. Even if the domestic market is saturated, these companies can still grow through international markets. Chinese internet companies, with few exceptions (such as TikTok and a few cross-border e-commerce platforms), rely heavily on domestic markets, leaving them vulnerable to growth stagnation when those markets saturate.
5. Regulatory Environments: China Focuses on Regulation; the US Emphasizes Innovation
Since 2020, China has implemented anti-monopoly and data security regulations, leading to penalties for companies like Alibaba and Meituan. While these policies are beneficial in the long run, they create uncertainty for businesses in the short term, reducing investor interest in Chinese tech stocks. The US, on the other hand, encourages innovation in the AI sector, with minimal restrictions on giant companies' expansion. Investors see American companies as more stable investments and are willing to pay a premium for their shares.
The Future: Who Will Become the Global Intelligent Infrastructure Provider?
The divergence between China and the US is not permanent. For Chinese companies to succeed, they need to transform from regional consumer platforms into global intelligent platforms. TikTok has already achieved global popularity, and domestic AI models are beginning to gain international traction, with some companies investing in AI robotics. Future valuations will no longer be based on serving 1.4 billion Chinese users but on serving 6 billion internet users worldwide along with providing AI capabilities. The capital market rewards companies with the ability to drive future growth; those stuck in traditional models will see their valuations decline, while those that can become global AI infrastructure providers will seize new opportunities.
This news highlights a fundamental shift in the tech industry: AI is not just a simple technological upgrade but a revolutionary transformation of the entire sector. Chinese companies must break out of their domestic market comfort zones and transition to becoming global AI infrastructure providers if they want to stay competitive.