Having negotiated from a position of weakness and vulnerability, as a comparatively deindustrialized nation reliant on China’s rare earth minerals, the United States is now widely perceived as the loser in the trade war with China.
On June 11th, President Trump announced that a broad framework had been reached, in which the US gets a “total of 55% tariffs, China is getting 10%.”
Last Thursday, President Trump confirmed that the US and China will mutually lift restrictions, concluding the previously built agreements in Geneva and London. US Commerce Secretary Howard Lutnick noted that deals are in the works for 10 major trading partners, while China is set to export rare earth minerals so critical in renewables, aerospace, automotive, consumer electronics, and other industries.
For US investors, this means that playing both sides of the AI supremacy race is on the menu. These readily available ADR stocks are the most promising exposure to China’s AI development.
1. Tencent Holdings Ltd. ADR
What Elon Musk aims to accomplish with X, as a super “everything app”, Tencent has already accomplished with omnipresent WeChat in China. And by integrating social networking with mobile payments, Tencent has a clear line ahead to monetize AI with cloud computing, gaming, and online advertising.
Judging by the latest release of multimodal AI Bagel from Bytedance, a privately held company, China has a thriving AI competition not just against the West but within its own ecosystem. Tencent built its own AI model, Hunyuan on Yuanbao platform, integrating it with Tencent Cloud, Docs, Games, Advertising, and Meeting, which is quite similar to Microsoft’s Copilot approach with OpenAI’s ChatGPT.
According to reports in March, Hunyuan T1 outperforms DeepSeek R1’s cost-effectiveness, but is slightly behind ChatGPT’s o1 version in Massive Multitask Language Understanding (MMLU). Yet, considering that it was DeepSeek that initially shook Western AI markets, it’s safe to say Hunyuan may deliver more surprises down the line.
Looking ahead, it is very likely that Tencent will be the first major company to standardize asset generation with AI, creating a new era of cost-effective game development. In Q1 2025, Tencent’s gaming division generated 33% of the company’s revenue at around $8.2 billion.
For comparison, NetEase (NASDAQ:), the largest gaming company in China behind Tencent, only made $4 billion in total sales in the same quarter.
Overall, Tencent generated $25.1 billion revenue in Q1, growing year-over-year by 13%. Most importantly, Tencent’s operating margin increased from 36.8% to 38.5% in that period. This profitability in core operations is likely to strengthen further, driven by AI’s role as the ultimate cost-cutting mechanism.
Year-to-date, TCEHY stock is up 21%, presently priced at $64.46 per share. According to WSJ’s forecasting data, the average TCEHY (OTC:) price target is $80.81, with the bottom of $50.57 and the ceiling price target of $94.06 per share. Most analysts (44) recommend buying TCEHY shares at this price level, with only one dissenting with a selling recommendation.
2. Qifu Technology Inc. ADR
On the lower end of notability in the West, Qifu Technology (NASDAQ:) holds a promising momentum. The fintech company integrates AI to provide advanced data analytics whenever there is need to deploy credit and risk management.
Regardless of the political system, modern civilization runs on credit. After all, time is the most precious resource, and access to upfront funds enables scaling, from individuals to governments. Qifu covers the entire credit cycle, from first issued loans to post-loan management, generating service fees as revenue in the process.
In Q1 2025, Qifu reported 58.4 million users with approved credit lines and 163 financial institutions, representing 11.6% year-over-year growth. For the quarter, the company facilitated ~$12.41 billion worth of loans, which is a growth of 15.8% from the year-ago quarter.
At the core of its business model, Qifu emphasizes the “dual flywheel effect” by which AI gets better the more credit it assesses. In turn, there is more demand for Qifu’s services. Combined with light capital requirements, this appears to be the case judging by Qifu’s net income increase of 60% year-over-year.
Year-to-date, QFIN stock is up 11%, presently priced at $43.22 per share. The average QFIN price target is $55.86. The bottom outlook of $50.18 is also significantly higher than the present price level, while $60.82 is the QFIN ceiling price target.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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