(Bloomberg) -- Shares of Tencent Holdings Ltd. have surged more than 10% this month, outperforming the Magnificent Seven and underscoring global investors’ growing appetite for China’s undervalued megacaps.

The stock’s most recent bump came from an earlier-than-expected debut for a blockbuster title, as the Chinese game sector looks to break out of a long malaise. In contrast, US tech giants have slipped on reduced expectations for profit growth as they attempt to deliver on the promise of artificial intelligence.

Tencent should return to sequential profit growth in the current quarter on strength in games and short videos, according to Bloomberg Intelligence analysts Robert Lea and Jasmine Lyu. Still the shares are trading at less than 16 times projected earnings compared with a five-year average of nearly 23 times and 28 times for a gauge tracking the Magnificent Seven.

The measure of the largest US tech stocks is down about 4% this month, amid concerns that the steep climbs in Nvidia Corp. and others may have been overdone. Technical signals, meanwhile, indicate Tencent may be poised for further gains, with its 50-day moving average on track to close above the 100-day level.

--With assistance from Ishika Mookerjee.

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