Let us weigh both sides more systematically:

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1. Betting on the Underdog (Meituan)

Pros:

Valuation discount: After a steep sell-off, the stock may already price in weaker earnings. Upside potential could be significant if the market overreacted.

Longer-term optionality: Underdogs often innovate aggressively to gain market share. If Meituan successfully adapts, the turnaround could be rewarding.

Favourable risk-reward (if entry is well-timed): Buying into pessimism may yield higher multiples once sentiment improves.

Cons:

Business headwinds remain: Food delivery competition is intense, margins thin, and regulatory pressure in China is non-negligible.

“Falling knife” risk: Underdogs can stay undervalued or decline further if fundamentals do not improve.

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2. Riding the Surge (Alibaba)

Pros:

Momentum and market confirmation: A double-digit jump suggests institutional support and renewed confidence. Riding a positive trend reduces the chance of immediate losses.

Catalyst-driven growth: Cloud computing, AI chips, and cost controls provide tangible growth stories.

Relative safety vs. peers: Larger scale and diversified business lines cushion downside risk.

Cons:

Valuation premium after a surge: Buying after a sharp rally may leave less upside in the short term.

Crowded trade risk: Popular stocks attract hot money, which may exit quickly at the first sign of trouble.

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Your points

Why underdog? → You are correct that the underdog offers more upside per unit of risk, assuming fundamentals stabilise.

Why major trend? → Equally true: with a proven leader (like Nvidia or Alibaba in this context), one buys trend security, reducing the risk of capital loss.

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✅ A balanced approach is sometimes to layer positions: allocate a core stake to the major trend (for stability and growth) while taking a smaller, speculative stake in the underdog (for asymmetric upside). This way, you are not forced to choose one extreme.