By Yifan Wang

Chinese technology stocks are rebounding as investors hunt for bargains after Beijing's latest regulatory tightening cheapened the sector's valuations.

Shares of Alibaba Group Holding Ltd. rose as much as 6.5% on Wednesday. The stock had slumped over 15% in the two trading days after authorities launched an antitrust investigation into the e-commerce giant.

The sell-off, which sent the stock to its lowest close since June on the Hong Kong stock exchange, has made Alibaba "one of the cheapest in the whole Chinese internet space," investment bank Nomura said in a report, adding the current price level would be attractive for long-term investors.

Some believe the steep fall in its valuation has already priced in the probe's potential damage to Alibaba's future earnings growth.

"Considering that the event's impact is not certain yet, and that the stock price has dropped significantly, we advise cautious optimism in the near term," said First Shanghai, a Hong Kong-based brokerage.

Alibaba's peers were also higher with Tencent Holdings, one of its largest rivals, 5.5% higher and food delivery firm Meituan rising 4.5%, outpacing the benchmark Hang Seng Index's 1.5% gain.

Alibaba shares were last up 5.8%.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

12-30-20 0109ET