Amid improving market sentiment, star investor Cathie Wood, founder and CEO of ARK Invest, is bargain hunting in Chinese equities. On the first trading day of the week, Wood purchased shares in five companies, three of which were U.S.-listed Chinese stocks: e-commerce giant Alibaba (BABA), search leader Baidu (BIDU), and autonomous driving company Pony AI (PONY). This move is seen as a signal that the prominent growth investor is betting on a rebound for the beaten-down Chinese tech sector.
While these three companies operate in different segments, they are all key players in the digital transformation of the world’s second-largest economy.
A late bloomer in this year’s Chinese stock rally, Baidu’s shares have surged more than 60% in the past three months. Its core search engine business has faced headwinds, with revenue declining in two of the past three years and edging lower again in the first half of 2025.
The catalyst for its recent rise is its fledgling AI chip business. Against the backdrop of U.S.-China tech restrictions, demand for domestic alternatives is growing, and Baidu’s Kunlun AI chips are positioned to benefit.
Investment Highlights:
Despite a 95% stock price surge this year, Alibaba’s fundamental growth remains muted. Revenue has been growing at a single-digit percentage for four consecutive years, and the company missed Wall Street profit estimates for two straight quarters this year.
However, its core domestic e-commerce engines, Taobao (C2C) and Tmall (B2C), are formidable cash generators. While contributing 45% of consolidated revenue, they accounted for a staggering 113% of consolidated adjusted EBITDA.
Investment Highlights:
Since its IPO at $13 per share ten months ago, Pony AI’s stock has been on a wild ride, soaring past $23 before plunging to a low of $4.11. It has since rebounded dramatically, now up 58% from its IPO price. The company is not yet profitable, but its progress in commercializing robotaxis is notable.
Key Advantages:
The primary challenge is its hefty market capitalization of $7.3 billion, which it must grow into. However, plans to launch services in Qatar indicate global expansion potential.
Wood’s concentrated buying spree reflects a dual-pronged strategy: seeking value in established giants like Alibaba and Baidu, while simultaneously betting on the disruptive potential of niche leaders like Pony AI. Despite persistent geopolitical risks, the significant correction in Chinese tech stocks has likely created long-term entry points for some investors.
Notably, all three companies have exposure to artificial intelligence, aligning perfectly with ARK Invest’s long-standing thesis on AI as a transformative technology.
