$AAPL: Analyst Downgrade Flags 44% Downside — $490M China Sales Settlement Still Looms

Investing.com-- Baidu Inc shares surged on Wednesday, lifted by growing investor confidence in its home-grown AI chip efforts as China accelerates its drive toward semiconductor independence.

The rally follows reports that Baidu has begun using its internally developed Kunlun P800 chip to train versions of its Ernie large language models, partly displacing reliance on Nvidia (NASDAQ:NVDA) chips.

The surge was also attributed to Baidu’s AI-focused deal with state-owned China Merchants Group (HK:3968) to apply AI across transportation, finance, and property sectors.

Hong Kong-listed shares of the company surged as much as 17% to HK$131.9 on Wednesday, reaching their highest level in nearly a year.

The stock jumped nearly 20% last week, when reports emerged, while it has gained more than 40% so far this month.

Adding to the upbeat sentiment, a Bloomberg report showed that analysts at Arete Research Services upgraded their rating on Baidu’s American depositary receipts to "buy" from "sell", ending the sole sell recommendation it had maintained since last May.

The chip strategy reinforces China’s tech self-sufficiency drive amid U.S. chip export controls. Chinese regulators have discouraged the use of Nvidia’s H20 chips, in a bid to boost their domestic chipmaking.

Investing.com-- Alibaba Group (NYSE:BABA) (NYSE:BABA) shares rose sharply in Hong Kong trade on Wednesday, buoyed by reports of more progress in China’s homegrown AI chip ambitions, while speculation over founder Jack Ma’s return also helped. 

Alibaba shares rose 4.8% to HK$160.10 to their highest level since November 2021. They helped underpin a 1.5% spike in the Hang Seng index. 

Chinese media reported on Wednesday that a major upcoming data center from China Unicom– the Sanjiangyuan data center– had signed contracts to deploy AI chips from several Chinese firms, including Alibaba’s chip unit T-Head, Biren Technology, and Zhonghao Xinying. 

Separately, Bloomberg reported late Tuesday that Alibaba founder Jack Ma had become the most involved in the company since 2020, after largely disappearing from the public eye during China’s antitrust crackdown on internet giants. 

The report came as Ma made several appearances at Alibaba’s campuses, fuelling speculation that he was poised to return in a more official capacity to the e-commerce giant. Ma’s return is being touted as a sign that Beijing is loosening its grip on its internet giants, after a debilitating antitrust crackdown in the early 2020s. 

Alibaba is currently run by two of Ma’s longest-serving lieutenants, Joe Tsai and Eddie Wu. 

Another report showed China’s biggest chipmakers were testing advanced production tools aimed at creating artificial intelligence processors– a trend that could further Alibaba’s own plans for in-house AI chips. 

The company was seen benefiting from its AI ambitions in recent quarterly reports, with its cloud business logging much stronger top-line earnings. But this was offset by substantially higher expenses on AI development, as well as laggard e-commerce earnings amid stiff competition and sluggish consumer spending. 

Focus is now squarely on whether Alibaba and its Chinese internet peers can wean off their dependence on U.S.-made AI chips, which have become subject to increasing scrutiny from Beijing. 

While Alibaba had trained a bulk of its models on Nvidia’s H20 chips, recent reports showed the company seeking more in-house or locally built alternatives. 

The China Unicom data center could also serve as a major test for Alibab’s chip ambitions. 

Investing.com-- Asian shares were mixed on Wednesday as investors stayed cautious ahead of the U.S. Federal Reserve’s policy decision later in the day, while Japanese stocks hovered near record highs after trade data showed the country’s deficit shrank less than expected.

Regional markets also tracked the subdued close on Wall Street overnight. Benchmark indices closed marginally lower on Tuesday, while futures tied to them traded largely unchanged in early Asia hours on Wednesday.

Fed decision looms large; policy outlook in focus

The Fed is widely expected to deliver a 25-basis-point cut on Wednesday, its first this year, bringing the federal funds rate to 4.00%-4.25%. 

Markets have largely priced in the move, but attention is centred on the central bank’s updated economic projections and Chair Jerome Powell’s remarks for clues on the pace and extent of further easing. 

Fed funds futures imply as much as 65-70 basis points of cuts by year-end, though policymakers could strike a more cautious tone if inflation remains sticky.

“The focus will be on the new set of projections and also the individual votes, with Stephen Miran participating for the first time,” ING analysts said in a note.

Lower U.S. rates tend to support capital flows into Asia and ease pressure on regional currencies. 

Hong Kong’s Hang Seng index jumped over 1% on Wednesday, remaining buoyed by tech sector gains.

China’s blue-chip Shanghai Shenzhen CSI 300 rose 0.4%, while the Shanghai Composite index edged 0.2% higher, remaining near decade high levels.

South Korea’s KOSPI slipped more than 1% on Wednesday, retreating after six straight sessions of record highs.

Elsewhere, Australia’s S&P/ASX 200 fell 0.7%, while Singapore’s Straits Times Index edged 0.2% lower.

Futures for India’s Nifty 50 traded 0.3% higher before market open.

Japan trade data shows resilience; Nikkei near record highs

In Tokyo, the Nikkei 225 edged 0.2% higher, holding just below record highs of 45,055.0 points reached on Tuesday. 

The broader TOPIX index fell 0.4%.

Trade data for August showed resilience despite tariff headwinds. Exports slipped 0.1% from a year earlier, less than forecasts for a 1.2% drop, while imports fell 5.2%. 

That left a trade deficit of 242.5 billion yen ($1.64 billion), narrower than the 325 billion yen shortfall expected by economists.

Exports improved after the U.S. and Japan finalized a trade deal in August, capping U.S. tariffs on Japanese goods at 15%. Still, domestic demand in Japan remained weak, weighed down by high import costs and persistent inflation.

Investing.com-- Bernstein initiated coverage on discount retailer Five Below Inc (NASDAQ:FIVE) with a Market-Perform rating and a price target of $160, citing early signs of a turnaround but cautioning that it was too soon to declare success.

The brokerage noted that Five Below struggled with weak comparable sales growth and margin pressure after the COVID-19 pandemic, prompting a management shake-up in 2024. The new leadership focused on simplifying pricing, reducing product variety, improving merchandising, and slowing the pace of store openings to strengthen its core business.

Recent results showed improvement, with comparable sales rising 7% in the first quarter and 12% in the second. However, Bernstein argued that much of the momentum stemmed from temporary factors, including tariff-driven price increases, the closure of rival Party City stores, and reduced competition from online retailer Temu.

Founded in 2002, Five Below grew rapidly by targeting teens and pre-teens with low-priced discretionary products. It operated 1,858 stores as of the second quarter of 2025, but Bernstein estimated a total addressable market of around 5,600 U.S. locations. Still, inflation has weighed on new store economics, leading the company to moderate its expansion to roughly 175 stores annually, compared with higher double-digit growth historically.

Bernstein pointed out that the stock’s valuation had rebounded to its historical average of about 30 times earnings, supported by the brand’s appeal to younger consumers and strong unit growth. But with slower store expansion and lingering uncertainty around merchandising execution, the analysts recommended waiting for clearer signs of sustainable improvement.

Five Below’s shares closed at $146.96 on September 15, implying a potential 9% upside to Bernstein’s target.

Five Below, along with other discount retailers such as Dollar General Corporation (NYSE:DG) and Dollar Tree Inc (NASDAQ:DLTR), have benefited from an increasing number of cost-conscious customers this year, especially as consumers fretted over the inflationary impact of President Donald Trump’s trade tariffs. Tariff-related disruptions in popular online shopping platforms, especially China-based Temu, also drove more customers towards discount stores. 

Investing.com-- BHP Group (ASX:BHP) said on Wednesday it will cut roughly 750 jobs and suspend operations at coal mines it runs in Queensland with Japan’s Mitsubishi (TYO:8058), citing weaker coal prices and high state royalties.

BHP Mitsubishi Alliance (BMA) said on Wednesday the Saraji South section of its Saraji complex will be placed into care and maintenance from November. About 72 workers will be affected directly at the mine, with the bulk of job losses spread across BMA’s broader Queensland operations.

The Saraji complex produced about 8.2 million metric tonnes of coking coal in the year to June 2025.

BMA President Adam Lancey said the decision was “necessary” under current conditions. “We do not want to see operations paused or jobs lost,” he said.

Queensland lifted royalty rates in 2022, with tiers rising as high as 40% when prices exceed A$300 a tonne.

Sydney-listed BHP shares fell 1.3% to A$40.24 as of 01:58 GMT.

Investing.com-- GSK (LON:GSK) and Eli Lilly (NYSE:LLY) announced fresh U.S. manufacturing investments on Tuesday, joining a wave of global drugmakers ramping up domestic capacity as the Trump administration considers imposing tariffs on imported medicines, the Wall Street Journal reported on Tuesday.

According to the WSJ’s tally, more than a dozen drugmakers have pledged over $350 billion in U.S. investments this decade, partly to offset potential tariff costs.

GSK said it would spend $30 billion in the U.S. over the next five years on research, supply-chain infrastructure, and new plants, including $1.2 billion for a factory outside Philadelphia to make drugs for respiratory diseases and cancer. 

Eli Lilly said it will invest $5 billion in a new plant near Richmond, Virginia, to produce monoclonal antibodies and bioconjugates, hiring about 650 workers once completed.

The U.S. administration is investigating pharmaceutical-specific tariffs, which Trump has said could rise to as much as 250% over 18 months.