Tencent (OTC:TCEHY) and JD.com (NASDAQ:JD) were both standout performers in the crowded Chinese tech sector this year.

Tencent's stock rallied nearly 70% as it impressed investors with the robust growth of its advertising, social networking, gaming, and fintech businesses. JD's stock soared 160% as its e-commerce revenues surged.

Tencent and JD are already joined at the hip. Tencent owns a 17.1% stake in JD, and JD operates online stores within Tencent's WeChat. Both companies consider Alibaba (NYSE:BABA) to be a mutual adversary.

Shanghai's skyline on a rainy day.

Image source: Getty Images.

Does either Chinese tech giant still have room to run over the next year? Let's compare their business models, growth rates, and valuations to find out.

Tencent: A jack of all trades

Tencent is the world's largest video game publisher. Its online gaming revenue accounted for a third of its top line last quarter, and it publishes hit games like League of Legends, Honor of Kings, and PUBG Mobile.

Its owns WeChat, the largest mobile messaging platform in China with over 1.2 billion monthly active users (MAUs), and its older counterpart QQ, which served 648 million mobile MAUs last quarter. WeChat hosts millions of third-party Mini Programs, which allow users to buy products, hail rides, pay bills, order food, and more without ever leaving the app.

Tencent also owns Tencent Video, one of the largest video streaming platforms in China, and a big stake in Tencent Music, the country's top streaming music platform.

Tencent sells ads across that sprawling ecosystem, and its online ad revenue accounted for 16% of its revenue last quarter. Another 23% came from value-added services, including subscriptions, across those platforms.

Tencent's fintech and business services unit -- which generated 26% of its revenue last quarter -- hosts WeChat Pay, which holds a near-duopoly in China's digital payments market with Ant Group's Alipay; and Tencent Cloud, the second-largest cloud platform in China after Alibaba Cloud.

JD.com: The anti-Alibaba

JD is often compared to Alibaba, but the two companies operate completely different business models. Alibaba operates paid listing platforms, doesn't take on inventories, and fulfills orders with its Cainiao subsidiary. 

JD is a direct retailer that takes on inventories and fulfills its orders via a first-party logistics network. Therefore, JD is actually China's top direct retailer by annual revenue, while Alibaba owns the country's top e-commerce marketplaces.

JD's autonomous delivery vehicle.

Image source: JD.com.

JD's approach allows it to maintain tighter control over its products and prevent counterfeit products from tainting its marketplaces. Its JD Logistics network, which was expanded through years of investments, has become one of the most advanced delivery platforms in China, with automated warehouse robots, delivery drones, and driverless delivery vehicles.

In addition to Tencent, JD's top investors include Walmart, which operates an online grocery joint venture with the company, and Alphabet's Google, which integrates JD's marketplace into Google Shopping.

JD's sales usually accelerate during three major shopping periods throughout the year: Chinese New Year in January or February, the 618 Grand Promotion, which commemorates its own anniversary in the first half of June, and the Singles Day shopping day on Nov. 11.

Which company is growing faster?

Tencent's revenue rose 28% year-over-year in the first half of 2020, led by double-digit growth across all its core businesses. The COVID-19 crisis boosted its gaming and value-added service revenue as more people stayed at home, and a shift to remote work lifted its cloud revenue.

Its online advertising business also remained surprisingly resilient, as higher spending from e-commerce, gaming, and online education companies during the crisis offset its loss of ad revenue from pandemic-stricken industries. Its adjusted profit, which excludes its investments in other companies, rose 29%.

A young woman uses a smartphone.

Image source: Getty Images.

Analysts expect Tencent's revenue and earnings to rise 33% and 21%, respectively, this year. Based on those estimates, Tencent's stock seems reasonably valued at 44 times this year's earnings.

JD's revenue also rose 28% year-over-year in the first half of 2020. Its revenue surged 34% in the second quarter, marking its strongest growth in ten quarters, as this year's 618 Grand Promotion benefited from pent-up demand during the pandemic and an aggressive expansion into lower-tier cities.

JD's annual active customers grew 30% year-over-year to 417.4 million during the second quarter, and over 80% of its new customers came from lower-tier cities.

Its net income per ADS more than doubled year-over-year in the first half of 2020, thanks to robust sales of higher-margin products, the increased scale of its logistics network, and tighter cost controls.

Analysts expect JD's revenue and earnings to rise 33% and 51%, respectively, for the full year. Its stock trades at nearly 60 times this year's earnings, but that's a fairly reasonable valuation relative to its growth rate.

The better buy: JD.com

I own both Tencent and JD, but Tencent's lower growth rates and its mixed exposure to volatile markets like online games, ads, fintech, and cloud computing make it a slightly less attractive stock than JD right now. Meanwhile, JD's accelerating growth, its simpler business model, its superior scale, and its growing presence in lower-tier cities all make it a more compelling growth stock than Tencent.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.