(Bloomberg) -- Chinese technology stocks fell as traders took some money off the table following a rally driven by optimism over the country’s artificial intelligence potential.

The Hang Seng Tech Index ended Thursday 0.9% lower, reversing an earlier advance that briefly saw the gauge reach a three-year high. The index pushed lower as shares of Alibaba Group Holding Ltd — the latest AI darling — trimmed gains to just 2.6%.

Thursday’s setback may do little to dent insatiable demand for the sector, after the rise of Chinese AI startup DeepSeek has sparked a hunt for beneficiaries from the country’s advancement in large language models.

“The Hong Kong stock market has been on a long upward trend, but today we finally see some signs of profit-taking,” said Dickie Wong, executive director of research at Kingston Securities Ltd. “For AI concept stocks, short-term profit-taking is pretty normal.”

The Hang Seng Tech Index reached overbought territory Wednesday based on the 14-day relative strength index, data compiled by Bloomberg show. The gauge entered a bull market last week.

Alibaba trimmed gains Thursday upon confirmation that Apple Inc. is working with the e-commerce pioneer to roll out AI features in China — an event that had driven the stock in recent sessions.

--With assistance from Sangmi Cha.