Goldman Sachs expects Q3 earnings inflection for China's internet giants

• China has strong companies across all five layers of the AI framework, with the government focused on developing a self-sufficient AI ecosystem.
• The Chinese consumer economy remains soft, but the AI economy is robust, particularly due to external demand, creating a divergence.
• An earnings inflection point is expected for Hong Kong-listed internet giants (like Alibaba, Tencent, Baidu) in Q3 (Oct/Nov), which could lead investors to value their AI upside more.
• Equity markets are currently in 'neutral territory' regarding US-China geopolitical tensions, suggesting investors are not overly concerned.

Goldman Sachs' Kinger Lau discusses the divergence between China's sluggish consumer economy and its booming AI sector, driven by government focus on high-tech. He anticipates an 'earnings inflection point' for Hong Kong-listed internet giants in Q3, which could boost investor confidence in their AI potential, despite ongoing geopolitical tensions.