In a remarkable surge, Hong Kong stocks have reached their highest point in four years, invigorated by a wave of optimism surrounding technology firms. The rise is attributed to growing confidence in China’s artificial intelligence (AI) advancements and promising developments regarding a potential TikTok deal.

On Tuesday, the Hang Seng Index jumped by 1.4%, paralleling gains in mainland Chinese stocks, which are nearing a 3.5-year peak. The blue-chip CSI300 Index rose by 0.6%, while the Shanghai Composite Index experienced a 0.4% bump.

Tech giants traded in Hong Kong thrived, soaring by 3.5% following a robust rally in U.S. markets. Baidu saw a staggering increase of nearly 16%, its highest since October 2023, while Alibaba shares climbed 5%, reaching their best performance since November 2022.

Analysts from Goldman Sachs highlighted significant developments in China’s AI infrastructure, indicating new narratives and launches of cutting-edge AI models. In light of these factors, they revised Alibaba's target price to HK$174, fueled by expectations of accelerated cloud growth and strong demand for computing services.

In a striking move, reports emerged that Alibaba and Baidu have begun utilizing internally designed chips for AI model training, reducing reliance on Nvidia technology.

Sentiment was further buoyed by U.S. President Donald Trump’s announcement regarding an agreement to ensure TikTok continues its operations in the United States, alleviating fears of a potential ban.

Meanwhile, the CSI Semiconductor Material & Equipment Thematic Index rose by 2.6%, with chip powerhouse SMIC seeing its shares increase by 6.6%.

While consumer-related stocks responded with less enthusiasm to China's new measures aimed at boosting services consumption, pledging to liberalize areas like the internet and culture and to promote international sports events, the overall market outlook remains positive.