China tech slump: Alibaba, Tencent, Xiaomi shares fall

Shares of Alibaba, Tencent and Xiaomi have declined this year as first-quarter earnings missed expectations, profits fell and component costs rose. Xiaomi is down about 30% year-to-date and roughly 55% from its peak last year. Tencent has fallen about 27% and Alibaba about 13% so far this year.

U.S. technology peers have outperformed. Apple has gained roughly 56% over the past 12 months with a market value near $4.6 trillion, and Amazon has risen about 33% with a market capitalization approaching $3 trillion. Hong Kong’s Hang Seng Tech Index sits more than 26% below its high from last year, while the Nasdaq 100 is up more than 14% this year.

Tencent reported first-quarter revenue of 196.5 billion yuan ($28.9 billion), a 9% increase from a year earlier but below the median analyst estimate of 199 billion yuan. Domestic gaming revenue was 45.4 billion yuan, up 6% year-over-year after a 24% gain in the same quarter last year. The company’s business services revenue grew 20% year-over-year. Tencent’s WorkBuddy, an AI-driven enterprise assistant, has become widely used in its enterprise offerings.

Alibaba’s first-quarter results showed a sharp decline in profitability. EBITDA fell to 5.1 billion yuan ($750 million), an 84% year-over-year drop, as the company maintained spending on its technology and e-commerce operations. Management now plans more than 380 billion yuan of investment in AI over the next five years.

Xiaomi reported first-quarter revenue of 99.14 billion yuan, down 10% from a year earlier, and profit for the period fell 56.5% to 4.7 billion yuan. The company attributed the decline to higher prices for components such as memory and stronger competition in its smartphone market, including gains by Apple in China. Xiaomi’s shares are trading at their lowest level since December 2024.

Market participants point to a combination of weaker-than-expected quarterly numbers, near-term spending on AI and rising input costs as factors behind the share-price declines. At the same time, several AI-related units across the companies continue to report revenue growth.

The performance gap between major Chinese tech names and large U.S. technology firms this year reflects differences in recent earnings results, investment plans and sector-specific cost pressures.