The Focus This Week: China’s AI Dream Hits The Earnings Stage
Search giant Baidu and EV-maker XPeng will be at the center of the action this week. These companies’ earnings are more than just a read on ad budgets or EV sales – they’re a view into China’s push to turn AI hype into pure economic muscle.
Now, Baidu is already squarely in investors’ sights: the Chinese AI trailblazer just dropped Ernie 4.5 Turbo, its fastest, cheapest, and most capable model yet. Think ChatGPT-level chops at just a sliver of the cost. And this behemoth’s been weaving the tech into everything it’s got – from its search engine to its cloud tools. The big question now is how it plans to make money from it all. And the answer to that riddle could be in the firm’s margins and its cloud revenue growth.
XPeng, meanwhile, is playing in a different lane, betting that smarter cars will give it an edge in China’s brutally competitive EV race. Its driver-assist tech is now baked into most of its models, and with a massive 273% jump in deliveries last month, that bet looks like it may pay off. But let’s not get ahead of ourselves: margins are tight, and rivals aren’t exactly falling asleep at the wheel. So this earnings drop will reveal whether XPeng is pulling ahead or about to get lapped.
Both will matter more than they first appear. See, China isn’t trying to win the AI race with the biggest chips or the flashiest chatbot models. It’s playing the long game: keep it cheap, keep it useful, and get it into the real world – in apps, factories, and cars. Less Silicon Valley demo video, more mainstream.
The opportunity is real: if China gets it right, AI could fix some of its biggest headaches, from its shrinking workforce to its sluggish productivity and its meek economic growth. But investors aren’t sold just yet. Between chip bans, slow monetization, and the deflation that’s been squeezing margins, confidence isn’t riding very high. Just ask JD.com and Tencent. They delivered solid results last week, and got little attention for it, with investors still worried about weak stimulus, trade tensions, and a recovery that keeps stalling. For China’s tech sector, success isn’t just about beating expectations: it’s about proving that its companies have star potential.
On The Calendar
- Monday: China industrial production (April) and retail sales (April)
- Tuesday: Earnings: Home Depot, Palo Alto Networks
- Wednesday: UK inflation (April), Earnings: Baidu, XPeng, Snowflake, Zoom, Medtronic
- Thursday: UK PMI (May), German PMI (May), Earnings: Intuit
- Friday: Japan inflation (April), UK retail sales (April)
What You Might’ve Missed Last Week
Global
- A US-China tariff truce sparked a market rebound
- Gold slid as trade tensions eased
US
- Walmart’s results flashed a warning for consumers – and the economy
Europe
- Europe’s economic rebound looked better than feared – but it may be tested soon.
Why It Matters
The US and China hit pause on their trade fight about a week ago, agreeing to a 90-day tariff truce that slashed import duties from triple digits down to 30% for Chinese goods and to 10% for US ones. That move followed weeks of escalating trade blows that rattled markets and bruised investor sentiment. So the deal understandably triggered a swift relief rally: the S&P 500 and Nasdaq clawed back their year-to-date losses, and the VIX – Wall Street’s fear gauge – plunged. It’s just a 90-day reprieve, but for now at least, markets are exhaling.
Gold saw its price slide as tensions between the US and China mellowed, and as a stronger dollar took the shine off the metal’s demand. The price of an ounce fell from its peak near $3,500, but analysts say it won’t likely be down for long, with so many worries about uncertainty, geopolitics, and inflation. That said, with the gold-oil ratio at historic extremes and speculative positioning near record highs, the dip may reflect a market that has simply jumped ahead of itself.
Walmart beat expectations on sales and stuck to its full-year outlook in its earnings update – but the bigger news was its warning: its prices are heading higher. Even with the US-China tariff truce, the retail giant said cost pressures were creeping back in – from your electronics to your morning coffee. It’s not just a Walmart problem either. But as America’s biggest retail chain, its update hints that trade-driven inflation is likely to spill over – and that, just as economic growth shows signs of cooling. With profits under pressure and no guidance for next quarter, the message was clear: the inflation fight may not be over, and the trade war hangover may be just beginning.
The UK, Norway, and Switzerland all delivered surprisingly strong economic growth stats last quarter, with the UK expanding at its fastest pace in a year, thanks in part to a rush of pre-tariff exports to the US. Norway’s economy was lifted by hydropower, retail, and fishing, while Switzerland’s saw its biggest gain in two years on broad-based strength. The data suggests Europe’s recovery has more fuel in the tank than many thought – even if tariff spillovers and tax hikes might throw some speed bumps at it in the months ahead.
