Finance

Alibaba, Tencent and JD.com reported earnings this week that reflected improving Chinese consumer spending, and the growing benefits of artificial intelligence in advertising.
“The e-commerce and ad revenues were positive surprises as there were expectations tariffs would affect consumer behavior,” said Kai Wang, Asia equity market strategist at Morningstar.
However, a Morgan Stanley survey from April 8 to 11, conducted immediately after the escalation in U.S.-China tensions, found that consumer confidence fell to a 2.5-year low.

Downtown Beijing on May 2, 2025.
Greg Baker | Afp | Getty Images

BEIJING — Alibaba, Tencent and JD.com reported earnings this week that not only reflected improving Chinese consumer spending, but also the growing benefits of artificial intelligence in advertising.
E-commerce giant Alibaba said late Thursday its Taobao and Tmall group sales rose by 9% year on year to 101.37 billion yuan ($13.97 billion) for the three months ended March 31. That’s above the 97.94 billion yuan predicted by a FactSet analyst poll, and the quarterly growth figure was well above the 3% segment increase for the 12-month period ending March 31.

“The e-commerce and ad revenues were positive surprises as there were expectations tariffs would affect consumer behavior,” Kai Wang, Asia equity market strategist at Morningstar, said in an email regarding the three companies’ earnings results.
It’s important to note the earnings releases cover only the period before U.S.-China tensions escalated in April with new tariffs of more than 100% on products from both countries — an effective trade embargo. The two countries issued a rare joint statement Monday announcing a 90-day reduction in most of the recently added tariffs.
The U.S.-China trade dispute since April has negatively affected consumption to some extent, given the increased uncertainty for small and medium-sized businesses, Charlie Chen, managing director and head of Asia research at China Renaissance Securities, said Friday. He expects that as trade tensions ease, consumption will rise.

But despite lackluster consumption overall, sales of certain electronics and home appliances have done well since last year thanks to China’s trade-in subsidies for supporting such consumer spending.
JD.com on Tuesday said its sales of for that category surged by 17% from a year ago. Overall, the e-commerce company reported a 16.3% increase in revenue from its retail business to 263.85 billion yuan in the three months ended March 31. That was better than the 226.84 billion yuan in retail segment sales predicted by a FactSet poll.

On Wednesday, Tencent said its “fintech and business services” segment, a proxy for consumer-related business transactions, reported a 5% year-on-year revenue increase to 54.9 billion yuan in the first quarter.
While Nomura analysts said that segment revenue growth was in line with estimates, they pointed out in a note that “Tencent ads was a big outperformer in the Chinese ads industry despite the challenging macro environment.”
Tencent’s marketing services revenue surged by 20% to 31.9 billion yuan, helped by “robust advertiser demand” for short videos and other content inside its WeChat social media app. Tencent noted “ongoing AI upgrades” to its advertising platform.

AI is boosting ads

AI is helping Tencent lift its click-through rates — a measure of success for online ads — to nearly 3%, company management said on an earnings call Wednesday, according to a FactSet transcript. That’s up sharply from a 0.1% click-through rate for banner ads historically, and around 1% for feed ads, the company said.
Combined monthly average users for WeChat, known as Weixin in China, topped 1.4 billion in the first quarter for the first time. The app offers one of two major mobile payment systems used in mainland China.
Many coffee shops and online retailers also use mini-apps in WeChat for customers to place orders. Tencent said Thursday that its e-commerce operations had grown so large it was now a new unit within WeChat.
“AI ads improve efficiency and algorithm, which should translate into better targeting towards consumers even if macro conditions are not optimal,” Morningstar’s Wang said. “It is still a bit early to quantify how much incremental benefit AI ads bring compared to non-AI ads, but we have seen some monetization from AI-driven ads.”
JD said its marketing revenues climbed by 15.7% to 22.32 billion yuan for the quarter, also partly attributing that rise to AI tools.
On an earnings call Tuesday, JD management said its advertising research and development team is using large language models to improve ad conversion rates and accelerate ad revenue growth. The company added it is implementing AI tools that enable merchants to “execute complex ad campaigns” with a simple command.

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Advertisers have long sought ways to target ads at the consumers most likely to make a purchase.
On Wednesday, YouTube announced that advertisers can use Google’s Gemini AI model to target ads to viewers when they are most engaged with a video.
Alibaba noted that marketing revenue, which it calls “customer management,” grew 12% year on year to nearly $10 billion thanks in part to increased use of the company’s AI tool for boosting merchants’ marketing efficiency, Quanzhantui.

Uncertain outlook

However, Alibaba’s overall profit was only about half of what analysts had predicted, sending shares down by nearly 7.6% in subsequent the U.S. trading session.
China is set to release retail sales data for April on Monday. Analysts polled by Reuters predict a 5.5% year-on-year increase in retail sales for April, down slightly from 5.9% growth in March.
A Morgan Stanley survey from April 8 to 11, conducted immediately after the escalation in U.S.-China tensions, found that consumer confidence fell to a 2.5-year low, and 44% of respondents were concerned about job losses — the highest since 2020 when the survey began. Only 23% of consumers expect to spend more in the next quarter, the survey found, an 8 percentage point drop from the prior quarter.
Lackluster domestic demand persisted in April, with a 0.1% year-on-year drop in the consumer price index for the month — the third-straight month of decline. However, when excluding food and energy prices, the so-called core CPI rose by 0.5%, the same pace as in March.
Since the real estate market has yet to recover, and exports are restricted by geopolitics, Chen expects Chinese policymakers to focus on boosting consumption in order to achieve the year’s growth target of around 5%.
He expects related stimulus policies to include boosting spending on food and beverage, caregiving, travel, sports, and durable goods not yet included in the trade-in subsidies program.
June 18 marks the next major promotional season for shopping in China.
“I think we’re going to get a pretty good 618. Now obviously, we’re not dealing with 30% year-on-year growth anymore like we were in the first 10 years” of the shopping festival, Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC earlier this week. The company helps foreign brands — such as Vitamix and IS Clinical — sell online in China and other parts of Asia.
He predicts 618 sales growth will rise by “very low double-digits.” More

Walmart’s business is strong enough to withstand tariff headwinds without increasing its prices, according to the discount retailer’s former U.S. CEO.
Bill Simon, who ran Walmart U.S. from 2010 to 2014, suggests the company may be overstating challenges tied to tariffs.

“If you look down deep and dig into the details of their earnings release today, you know this quarter they grew their gross profit margin in the U.S. business 25 basis points. So, they’re expanding their margin. They also reported their general merchandise categories were flattish because they had mid-single digit price deflation,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal first-quarter results. “That sort of gives them room in my view to manage any tariff impact that they would have.”
Simon is optimistic consumers can largely handle price increases — citing a steady jobs market and cheaper fuel prices this year. But he notes worrisome commentary from corporate executives could be chipping away at consumer confidence.
“All the doom and gloom we hear about price increases and tariffs like we heard from my friends at Walmart today, I think it scares them some,” said Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands.

Arrows pointing outwards

Walmart shares fell 0.5% on Thursday, but the stock closed above session lows. Shares are off almost 9% from the all-time high of $105.30 hit on Feb. 14.
On Feb. 20, Simon joined “Fast Money” as Walmart shares were wrapping up their worst week since May 2022 on tariff jitters. He suggested the stock was a steal for investors even though Walmart warned profits were slowing.

As of Thursday’s close, Walmart shares are positive for the year, up more than 6% in 2025. The stock has climbed more than 7% since President Donald Trump’s tariff announcement on April 2.
Disclaimer

Arrows pointing outwards More

Fed Chair Jerome Powell said Thursday that longer-term interest rates are likely to be higher as the economy changes and policy is in flux.
“We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks,” the central bank leader said at a policy conference.
The “supply shocks” remarks are similar to those Powell has delivered over the past several weeks cautioning that policy changes could put the Fed in a difficult balancing act

Federal Reserve Chair Jerome Powell talks to guests as he arrives to speak at the Thomas Laubach Research Conference held by the Federal Reserve Board of Governors on May 15, 2025 in Washington, DC.
Andrew Harnik | Getty Images

Federal Reserve Chair Jerome Powell said Thursday that longer-term interest rates are likely to be higher as the economy changes and policy is in flux.
In remarks that focused on the central bank’s policy framework review, last done in the summer of 2020, Powell noted that conditions have changed significantly over the past five years.

During the period, the Fed witnessed a period of surging inflation, pushing it to historically aggressive interest rate hikes. Powell said that even with longer-term inflation expectations largely in line with the Fed’s 2% target, the era of near-zero rates is not likely to return anytime soon.
“Higher real rates may also reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s,” Powell said in prepared remarks for the Thomas Laubach Research Conference in Washington, D.C. “We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks.”
The Fed held its benchmark borrowing rate near zero for seven years following the financial crisis in 2008. Since December 2024, the overnight lending rate has been in a range between 4.25%-4.5%, most recently trading at 4.33%.
The “supply shocks” remarks are similar to those Powell has delivered over the past several weeks cautioning that policy changes could put the Fed in a difficult balancing act between supporting employment and controlling inflation.
Though he did not mention President Donald Trump’s tariffs in his Thursday remarks, the central bank chief in recent days has noted the likelihood that tariffs will slow growth and boost inflation. However, the extent of either impact is difficult to gauge, particularly as Trump recently has backed off the more aggressive duties pending a 90-day negotiating window.

Nevertheless, the Fed has been reluctant to ease policy after cutting its benchmark rate by a full percentage point last year.

Looking back and forward

As for the ongoing framework review, the Fed will seed to develop a five-year plan for how it will guide decisions and the way the moves will be relayed to the public.
Powell said the process this time will look at a number of factors.
They include the way the Fed communicates its expectations for the future, while also entailing a look back at ways it can adjust the last review.
During the tumult of the summer of 2020, the Fed announced a “flexible average inflation target” approach that would allow inflation to run a little hotter than normal in the interest of providing full and inclusive employment. However, inflation targeting soon became a dead issue as prices soared in the wake of the Covid pandemic, forcing the Fed into a series of historically aggressive rate hikes.
The current review will look at how the Fed considers “shortfalls” in its inflation and employment goals.
Powell and his colleagues initially dismissed the 2021 inflation surge as “transitory” because of pandemic-specific factors. However, several Fed officials have said the 2020 framework adoption did not factor into their decision to hold rates near zero even as inflation was rising.
“In our discussions so far, participants have indicated that they thought it would be appropriate to reconsider the language around shortfalls,” he said. “And at our meeting last week, we had a similar take on average inflation targeting. We will ensure that our new consensus statement is robust to a wide range of economic environments and developments.”
Further addressing the idea of potential supply shocks and their policy impact, Powell said the review will focus on communication.
“While academics and market participants generally have viewed the [Fed’s] communications as effective, there is always room for improvement,” he said. “In periods with larger, more frequent, or more disparate shocks, effective communication requires that we convey the uncertainty that surrounds our understanding of the economy and the outlook. We will examine ways to improve along that dimension as we move forward.”
Powell did not give a specific date on when the review will be completed, only saying that he expects it in “coming months.” For the last review, Powell used his annual remarks at the Fed’s Jackson Hole, Wyoming retreat to outline the policy. More

Trading platform eToro, which held its stock market debut on Wednesday, listed the Israel-Hamas conflict and the company’s Israel operations as potential business risks.
Escalation in the war “may adversely affect our business, financial condition, and results of operations,” eToro said.
Fighting between Israel and Hamas escalated after the attacks of Oct. 7, 2023.

Yoni Assia, Co-Founder and CEO of eToro, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2023.
Patrick T. Fallon | Afp | Getty Images

In eToro’s IPO filing, ahead of the company’s market debut on Wednesday, the stock trading platform spent over 1,500 words spelling out the potential risks of operating in Israel, home to corporate headquarters.
While the current military conflict between Israel and Hamas hasn’t “materially impacted” business, “the continuation of the war and any escalation or expansion of the war could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition, and results of operations,” eToro wrote in a section of the filing titled “Risks related to our operations in Israel.”

The company, which lets users trade stocks, commodities and cryptocurrencies, was founded in 2007 by brothers Yoni and Ronen Assia and David Ring, and is based in Bnei Brak, near Tel Aviv.
In its prospectus, eToro referenced the attacks of Oct. 7, 2023, by Palestinian Islamist group Hamas on Israel. In the year and a half since then, the two sides have mostly been at war in the Gaza Strip, where tens of thousands of Palestinians have been killed and much of the area has been made uninhabitable.
Tensions have also escalated with other designated militant groups in the region, including Hezbollah in Lebanon and the Houthis in Yemen.
“It is possible that these hostilities will escalate in the future into a greater regional conflict, and that additional terrorist organizations and, possibly, countries, will actively join the hostilities,” eToro wrote, adding that the magnitude of the conflict is “difficult to predict.”
Yoni Assia, eToro’s CEO, told CNBC in an interview that the company’s business is global, with operations worldwide. Regarding the challenges of being in Israel, Yoni Assia said “everything is in the risk factors.”

“We do hope to see more peaceful times,” he said. “It’s better for everyone and for our employees from a business point of view.” 

Read more CNBC tech news

EToro, which competes with Robinhood, had its Nasdaq debut on Wednesday. The stock popped 29% a day after eToro priced shares above the expected range. At the close of trading, the company was valued at about $5.4 billion.
EToro’s IPO comes as several tech companies get set to test the public markets following an extended drought dating back to the soaring inflation of 2022.
After the attacks of Oct.7, thousands of Israelis were called up for extended active reserve duty that caused some disruption to the country’s flourishing tech community. Ongoing obligations could “impact our competitive position and cause our sales to decrease,” eToro wrote.
Israel has also faced some backlash for its military campaign in Gaza.
The eToro filing cited International Criminal Court warrants for the arrests of Prime Minister Benjamin Netanyahu and his former minister of defense, and calls for boycotts from activist groups as potential roadblocks for the business.
The country has also been hit with credit downgrades from Fitch, Moody’s and S&P Global that could harm eToro’s operations, the filing said.
Etoro said that intensified cyberattacks since 2023, and potential damages from armed attacks, could raise costs or incapacitate its workforce due to safety concerns.
The company also highlighted tax law differences between the U.S. and Israel and the location of its executives as a potential risk factor.
“It may be difficult to enforce a U.S. judgment against us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors,” eToro wrote.
WATCH: Shares of eToro soar in Nasdaq debut More

China is restricting how much children can use generative artificial intelligence in schools, according to a local release citing the Ministry of Education.
Primary school students are prohibited from using unrestricted generative AI tools on their own, although an instructor may use the tech to assist in teaching, according to the local government report.

A student is playing chess with an intelligent robot in Xuzhou City, Jiangsu Province, China on May 13, 2025.
Cfoto | Future Publishing | Getty Images

BEIJING — China’s latest education policies for the year restrict the extent to which children can use generative artificial intelligence in the classroom, according to a local government report on Thursday.
The guidelines cited in the report, which weren’t publicly available, covered AI education and generative AI use in primary and secondary schools during 2025.

China’s Ministry of Education did not immediately respond to a request for comment.
Primary school students are prohibited from using unrestricted generative AI tools on their own, although an instructor may use the tech to assist with teaching, according to the local government report.
It added that middle schoolers can explore how generative AI reasons and analyzes information, while high schoolers are allowed to use the tech more broadly.
The report said the policies banned students from directly copying AI-generated content into homework and called on schools to establish a list of approved generative AI tools that can be used on school grounds.
The People’s Daily, the official newspaper of the ruling Chinese Communist Party, mentioned the new guidelines on the sixth page of its Thursday edition.

But the national state media report did not discuss specific limits on AI use, and instead focused on how the policies aimed to promote “scientific” and “standardized” promotion of AI education suited to various stages of education, according to a CNBC translation.
Use of generative AI in China has increased significantly after DeepSeek, a homegrown rival to OpenAI, in late January released a chatbot app. Tencent, ByteDance and other companies have released similar chatbots that have surged in popularity in China.  More

IF YOU want to put a policymaker on the spot, ask them what the top rate of income tax should be. The question befuddles everyone. On May 8th President Donald Trump broke with decades of Republican convention when he reportedly urged Mike Johnson, the speaker of the House of Representatives, to increase America’s highest federal levy on incomes from 37% to 39.6%, where it stood before the president’s own reforms in 2017. Mr Trump then took to social media to announce that although he would “graciously accept” such a change “in order to help the lower and middle income workers”, Republicans in Congress “should probably not do it”. He is nevertheless “OK if they do”. More

As Scott Bessent, America’s treasury secretary, negotiated with China in Switzerland late into the evening on May 11th, trade negotiators from the rest of the world found themselves at a loose end. Many had arrived in Washington for talks, desperately seeking trade deals, only to find America’s negotiators abroad and their meetings delayed or cancelled. One official, who expected to present painstakingly crafted positions on bovine-vaccination rules and currency manipulation, took the chance to visit the newly refurbished Air and Space Museum. He then left “about as empty-handed as before”. More

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