China’s DeepSeek frenzy shines light on Alibaba, Baidu’s AI outlook

Chinese AI renaissance may counterbalance investor concern about US tariffs

Last updated: February 17, 2025 | 08:44

3 MIN READ

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Chinese tech earnings kick off this week with Alibaba Group Holding Ltd.’s and Baidu Inc.’s outlooks in focus after the sudden rise of DeepSeek.

A Chinese AI renaissance may counterbalance investor concern about increased US tariffs and help narrow the valuation gap with Silicon Valley peers, according to Bloomberg Intelligence.

Alibaba’s investors are already reaping the benefits with an $87 billion boost for its Hong Kong listed shares, supported by its partnership with Apple Inc. to roll out AI features in China. A potential meeting with co-founder Jack Ma and President Xi Jinping could also extend a rally in China’s stocks.

Globally, DeepSeek’s high-efficiency and low-cost model could drive an inflection point for AI adoption this year, Citi analysts said. Baidu and Tencent Holdings Ltd. also announced they are integrating DeepSeek in their platforms.

In the banking sector, HSBC Holdings Plc and Standard Chartered Plc likely saw profits surge as cost cutting efforts pay off, which comes as HSBC is starting a new round of job cuts in at its investment bank.

The overall earnings mix might see greater support from their wealth business, as loan balances are seen dropping further and US tariffs and commercial property risks constrain corporate demand. Commentary on savings strategies will paint a picture on where to go from here.

Highlights to look out for:

Monday: No earnings of note.

Tuesday: Baidu’s (BIDU US) fourth-quarter revenue likely declined 4.5%, consensus shows. The firm will continue to work with Apple to develop AI features for iPhone users in China, according to The Information. The recent decision to make its Ernie AI chatbot free is likely related to DeepSeek’s market disruption, BI said. Looking ahead, the outlook isn’t any rosier with its AI ventures set to remain unprofitable for the next three years, BI added.

BHP (BHP AU) first-half Ebitda likely dropped to $12.8 billion, mainly due to weaker realized iron-ore prices, BI said. Watch for comments relating to capital spending, as its net debt may come in at around $12 billion and reach the top end of its target range by year end, it added.

Wednesday: HSBC’s (HSBA LN) cost-cutting initiatives will likely dominate the lender’s outlook when it posts fourth-quarter earnings. The bank has planned job cuts, reduced bonuses and shuttering investment banking units in Europe and the US, as it aims to shave off at least $3 billion in expenses.

UOB’s (UOB SP) fourth-quarter net interest margin is expected to decline further as asset yields get repriced on lower interest rates, CGS International said. The lender’s net interest income may hold steady on a pick-up in loan growth, and overall profit is seen up.

Thursday: Alibaba’s (BABA US) third-quarter revenue likely grew 6.5%, estimates show. A strong performance during Singles’ Day, China’s largest annual shopping festival, is likely to have lifted earnings.

Lenovo (992 HK) could be a beneficiary from an AI-driven transition and replacement cycle for PCs, Citi said. Its server business meanwhile could turn to profit later in the year. Overall revenues in its most recent quarter are seen up 14%, consensus shows.
Rio Tinto’s (RIO LN) iron ore volumes may offset the effect of weaker pricing, analysts at BI said. Comments on a potential merger with Glencore will be keenly watched, as will any remarks on Donald Trump’s planned 25% tariff on all imported steel and aluminum.
Singapore Airlines’ (SIA SP) occupancy dropped as capacity growth outpaced an increase in passengers, monthly data showed. Looking ahead, the city state’s flag carrier’s fuel hedging means it’ll miss out on some of the benefits of cheaper jet fuel, BI said.
Wilmar International’s (WIL SP) annual net income may shrink about 17%, estimates show. Profits from oilseeds and grains could ease on lower soybean crush margins in China, BI said. Meanwhile, keep an eye out for commentary on the group’s Indian Adani Wilmar joint venture after the Adani Group is said to plan an a $2 billion exit.
The worst may be over for PTT Public’s (PTT TB) gas businesses, given all downsides from regulatory risks have been priced in, Globlex Securities said. Upsides could come from its pharmaceutical and battery ventures.

Friday: Standard Chartered’s (STAN LN) net interest income in 2024 may reach the upper end of its guidance as higher volatility likely gave a boon to its global-markets unit, BI said. Cost optimization will likely remain in focus. And as a reminder, the lender recently named Maria Ramos as Chair.

(Updates throughout)

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