Tencent, JD.com, And Hon Hai Face Pressure From New US Tariffs.

Chinese tech giants, including Tencent, JD.com, and Hon Hai, face mounting pressure from new U.S. tariffs, threatening to slow their growth ambitions. While the companies are pouring resources into AI to drive expansion, higher trade barriers put them at a disadvantage compared to global rivals with easier market access.These Chinese companies expect lower earnings after President Trump announced new tariffs in April. As they boost AI spending, they may reduce stock buybacks, which could hurt short-term profits.

US tariffs reduce profits as tech giants shift focus to AI

Even as relations between the US and China show slight improvement, Chinese tech giants continue to feel the heavy impact of the trade tariffs.The trade barriers targeting semiconductors and other important tech imports create uncertainty around profits and future growth for companies like Tencent, JD.com, and Hon Hai. Their earnings expectations have dropped because they still operate under intense cost pressure and are more exposed to these tariffs than their global competitors.

Hon Hai Precision Industry Co. is a Taiwan-based electronics manufacturer known for its partnership with Nvidia and its large role in global chip production. The company reported a slowdown in sales growth in July due to President Donald Trump’s proposed 100% tariff on Chinese-made chips. However, its investments in US-based data center infrastructure bring optimism about its long-term prospects in AI.Still, their momentum in the short run could be limited due to the weak near-term demand for consumer electronics such as smartphones and personal computers.

As for Tencent, its next earnings report is expected to show net income growth of just 7.3%. This is the slowest rate it has seen in six quarters despite steady gains in its core advertising and video game businesses. The company’s AI initiatives are still in early stages and have yet to impact revenue. Analysts say its current business model relies heavily on its existing services, which could be the reason for Tencent’s slowdown.The company hopes that upcoming game releases, like Valorant Mobile and Honor of Kings: World, will help boost user engagement and improve future earnings.

Meanwhile, JD.com’s double-digit growth across its retail, logistics, and emerging business segments contributed to its relatively strong numbers, with second-quarter revenue rising 15%. This shows the company is finding ways to adapt and grow even in a difficult economic climate. Still, analysts say the drag caused by ongoing tariffs continues to affect both domestic confidence and international trade flows, slowing China’s overall consumer spending.

Chinese firms face local competition while chasing AI goals

The Chinese government is now pushing back on “monopolies” like JD.com, Alibaba, and Meituan in China’s large and fast-moving food delivery market. Authorities want them to stop “disorderly competition,” as seen in their aggressive pricing, unsustainable discounts, and market behavior that harms smaller players and destabilizes the industry.The companies responded, promising to tone down these tactics and work toward fairer competition. This move will likely hurt short-term revenue growth for firms that had leaned heavily on aggressive pricing to gain market share, even though it may support long-term industry health.

The targeted companies are also increasing their investments in artificial intelligence. Analysts say AI-related spending is starting to take precedence over shareholder-focused actions like stock buybacks. These firms risk weakening their short-term financial performance (a major concern for investors looking for immediate returns) by redirecting funds toward long-term innovation.Many Chinese are moving forward with the initiatives despite the risks and uncertainties. For example, Hon Hai recently sold its Ohio electric vehicle factory for $375 million. Analysts say the move aligns with the company’s strategy to focus more on North America’s data center technology and artificial intelligence infrastructure.

JD.com is also expanding its logistics capabilities and broadening its product offerings beyond traditional retail. At the same time, Tencent continues to rely on its strong gaming and advertising platforms to fund its AI development.

Source: CryptoSlate