China’s Terrific Ten – Who Are Really Terrific and Which Are Not?
China’s tech stocks have been on a tear recently, fueled by a combination of AI breakthroughs, government support, and a broader recovery in investor sentiment. This surge has led analysts and investors to group together a new set of high-performing Chinese stocks under the label “Terrific Ten”, similar to the U.S.’s Magnificent Seven.
For years, the Magnificent Seven—Apple, Microsoft, Alphabet, Tesla, Meta, Nvidia, and Amazon—dominated global equity markets. But recently, China’s Terrific Ten have outpaced them in returns, as seen in the chart comparing their performance.
However, the composition of the Terrific Ten feels a bit random. While some companies are true industry leaders deserving of the “terrific” label, others seem to be included just to round out the number to ten. Let’s break down each company to see who’s truly terrific and who’s not.
The Truly Terrific
Alibaba – The Iconic E-Commerce Giant
Alibaba is undeniably one of the most recognizable Chinese companies worldwide. It built China’s largest e-commerce empire, much like Amazon did in the U.S., and has a powerful cloud computing division. The company’s rise to global prominence was largely driven by its charismatic founder, Jack Ma, who positioned Alibaba as the face of Chinese entrepreneurship. Its core platforms—Taobao and Tmall—dominate China’s e-commerce scene, and despite rising competition, it remains the market leader.
That said, Alibaba has gone through a rough patch over the past few years. Regulatory crackdowns, increasing competition from Pinduoduo, and slowing revenue growth have weighed on investor sentiment. However, under its new management, Alibaba appears to be stabilizing. Alibaba Cloud has returned to double-digit revenue growth, and the company remains the largest e-commerce player in China. While not the hyper-growth story it once was, it’s still a terrific company in China’s tech landscape.
Verdict: Terrific
Tencent – The Undefeated King of China Tech
Tencent is China’s largest company by market cap and arguably the most influential. As the world’s biggest gaming company, it owns top-tier gaming titles and holds stakes in industry giants like Epic Games and Activision Blizzard. However, what really makes Tencent dominant is WeChat—a super app with over 1 billion users that integrates messaging, payments, social networking, and even e-commerce into a single ecosystem.
Unlike some of its peers, Tencent has managed to navigate regulatory challenges relatively well, thanks to its diversified revenue streams and deep integration into Chinese daily life. WeChat’s influence is so extensive that Chinese consumers barely need to leave its ecosystem, reducing reliance on external services like search engines. Tencent’s powerful combination of gaming, social media, and fintech ensures its continued dominance.
Verdict: Terrific
Meituan – The Food Delivery Powerhouse
Meituan is the undisputed leader in China’s food delivery industry, with a commanding 69% market share. Besides food delivery, Meituan has built a business model that extends to hotel bookings, local services, and even grocery deliveries, making it an integral part of China’s on-demand economy.
In recent years, Meituan has turned profitable and free cash flow positive, a crucial milestone for any tech company. Despite the challenges of regulatory scrutiny and rising competition, Meituan continues to grow at over 20% annually, cementing its dominance in the Chinese consumer space. As long as people continue ordering food and services online, Meituan remains a clear winner.
Verdict: Terrific
Xiaomi – The Apple of China, but More Ambitious
Xiaomi is often referred to as the Apple of China—and for good reason. It ranks third in global smartphone market share, just behind Apple and Samsung. It has successfully positioned itself as a premium brand while still offering affordable devices, making it highly competitive both in China and overseas markets.
But what really makes Xiaomi stand out is its move into electric vehicles (EVs). Unlike Apple, which scrapped its EV project, Xiaomi has successfully launched its first car, the SU7, which has been met with strong demand. Its share price has tripled in the past year, reflecting growing investor confidence. If Xiaomi can replicate its smartphone success in EVs, it could become one of the most important tech companies in China.
Verdict: Terrific
BYD – The Tesla Killer
BYD has done the unthinkable—it overtook Tesla as the world’s best-selling EV brand. This is an incredible achievement, given the competition in the EV space, which is growing fiercer by the day. What sets BYD apart is its ability to produce both batteries and cars at scale, a feat no other company has matched.
The company’s advantage in battery technology has allowed it to expand aggressively both in China and internationally. Even Warren Buffett saw its potential early on, investing in BYD long before it became a global powerhouse. With its vertically integrated supply chain and strong sales momentum, BYD is not just terrific—it’s exceptional.
Verdict: Terrific
Good but not great
NetEase – Tencent’s Shadow
NetEase is a respectable second-fiddle to Tencent in both gaming and music streaming. However, what gives it an edge is its strong profitability—NetEase enjoys over 20% net profit margins, significantly higher than JD.com. Its free cash flow and earnings have consistently grew over the years, unlike many other businesses which have seen much larger fluctuations.
Despite its profitability, NetEase still lacks Tencent’s scale and influence. It remains a solid investment, but it’s hard to call it “terrific” when it’s always in Tencent’s shadow.
Verdict: Good but not great
Geely – A Strong Car Company in a Tough Market
Geely is one of China’s better-performing automakers, with stakes in Volvo, Lotus, Proton and more. It consistently delivers profits and free cash flow, making it a solid but unremarkable player in the auto sector.
However, competition in the car industry is brutal, and Geely doesn’t hold the top spot in any category. While it’s a strong business, it lacks the breakout potential of BYD. Also, Geely doesn’t bring to mind a tech company.
Verdict: Good but not great
The “Meh” Ones
JD.com – The Perpetual Second Place
JD.com is China’s second-largest e-commerce platform, but being second hurts. While Alibaba dominates in both e-commerce and cloud, JD is constantly trying to find its niche. It has expanded into logistics, fintech, healthcare, and even food delivery, yet it always seems to be trailing a bigger competitor.
JD.com’s biggest issue is its margins—unlike Alibaba, which enjoys higher-margin businesses like cloud computing, JD’s reliance on e-commerce means it struggles with low profit margins. Its less than 5% net profit margin is typical of a retailer.
Verdict: Meh
Baidu – The Search Engine Struggler
Baidu is China’s top search engine, but that means little in a country where search isn’t as dominant as it is in the West. Chinese users rely more on super apps like WeChat to get information rather than traditional search engines.
Baidu has tried pivoting to AI, but losing part of Apple’s AI business to Alibaba raises concerns about its ability to compete. Despite its efforts, Baidu feels like a company struggling to find its next growth engine.
Verdict: Meh
SMIC – A Risky Semiconductor Bet
As China’s largest foundry, SMIC is crucial to the country’s semiconductor ambitions, but foundries are capital-intensive and cyclical. Overinvestment could lead to losses, and SMIC is still far behind TSMC and Samsung in terms of technology.
China may push SMIC forward, but whether it translates to strong shareholder returns is unclear.
Verdict: Meh
Final Thoughts
Rather than the Terrific Ten, a more accurate name might be the Fabulous Five—Alibaba, Tencent, Meituan, Xiaomi, and BYD. The rest, while solid businesses, don’t quite make the cut.
What do you think? Is the Terrific Ten really that terrific?