The difference between Chinese and U.S. stocks is only getting clearer. The S & P 500 fell into correction on Thursday for the first time since 2023 . Meanwhile, the MSCI China index has surged double digits in its best start to a year in history, largely thanks to artificial intelligence, according to Goldman Sachs. Driving Chinese market gains are what Bank of America’s Michael Hartnett calls the “Fab Four” — Baidu , Alibaba , Tencent and Xiaomi . The tech companies’ stocks are all traded in Hong Kong; Baidu and Alibaba also have U.S.-listed shares. Invoking the popularity of The Beatles reflects the momentum with which the Chinese tech giants have risen on AI hopes. Alibaba and Tencent have in recent weeks both released AI models they claim rival those from DeepSeek and OpenAI, while the Chinese tech giants each have massive user bases given their respective dominance in the country’s e-commerce and social media industries. Alibaba on Thursday unveiled an updated version of its 200 million-user Quark browser with faster AI-generated results. Baidu has built its own AI model called Ernie that it’s been rolling out across its cloud storage and content generation apps. The company also develops autonomous driving and operates robotaxis across China. Xiaomi has downplayed its AI capabilities, instead focusing on its popular SU7 electric car , a swath of smartphones and internet-connected home appliances. The stock is on pace for its ninth-straight month of gains. It’s a “Year of International – long China & EU,” Hartnett said, saying the U.S.’s ” Magnificent 7 ” is now the “Lagnificent 7.” The CNBC Magnificent 7 Index — which includes Alphabet , Amazon , Apple , Meta Platforms , Microsoft , Nvidia and Tesla — is down about 12% year to date as of Friday. Even as of March 6, the DeepSeek news had triggered $3 trillion in market cap losses for the Magnificent 7, while doubling the market cap of the Fab Four to $1.6 trillion, according to Bank of America. Since Chinese startup DeepSeek’s AI breakthrough hit markets in late January, Beijing has ramped up its supportive signals on Chinese tech, while investors have become more interested in AI announcements from Alibaba and other Chinese companies. Initial Chinese stock gains have already started to fuel expectations that the local market will see its own version of the AI-driven rally that the U.S. saw in the last two years. “In the U.S., the AI rally rotated from AI infrastructure to AI enablers and then AI adopters. It’s a similar pattern in China,” HSBC analysts said earlier this month. They noted a “large valuation gap” between Chinese AI plays versus their U.S. peers, which could narrow as growth and profits pick up. Investors inside and outside China are getting more interested. Hong Kong stocks, particularly Alibaba and Tencent, saw net buys from mainland Chinese investors reach a record high on Monday . For international institutions, short-term hedge funds led most of the buying in February, while interest from longer-term investors has started to emerge this month, Robin Xing, chief China economist at Morgan Stanley, told reporters Wednesday in Beijing. “As concerns about the U.S. economy and U.S. markets [grow], their interest may increase,” he said in Mandarin, translated by CNBC. But he cautioned it’s not a given, and said research indicates U.S. consumers may not feel much impact until a 20% drop in stocks. — CNBC’s Michael Bloom contributed to this report.
Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 4, 2024.
CNBC
Warren Buffett’s love for Japanese stocks grows fonder even as he increasingly sells U.S. equities.
The 94-year-old investor’s Berkshire Hathaway holding company raised its holdings in five Japanese trading houses — Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo — by more than 1 percentage point each, to stakes ranging from 8.5% to 9.8%, according to a regulatory filing.
The “Oracle of Omaha” said in his 2024 annual letter that Berkshire is committed to its Japanese investments for the long term and has reached an agreement with the companies to go beyond an initial 10% ceiling.
All five are the biggest “sogo shosha,” or trading houses, in Japan that invest across diverse sectors domestically and abroad — “in a manner somewhat similar to Berkshire itself,” Buffett said. Berkshire first bought into the companies in the summer of 2019.
Part of the investment strategy involves Buffett hedging currency risk by selling Japanese debt and then pocketing the difference between dividends from the investments and the bond coupon payments he has to make to service the debt.
At the end of 2024, the market value of Berkshire’s Japanese holdings came to $23.5 billion, at an aggregate cost of $13.8 billion. The investor praised the companies’ managements, relationships with their investors and their capital deployment strategies.
Buffett first unveiled the Japanese positionsd on his 90th birthday in August 2020 after making regular purchases on the Tokyo Stock Exchange, saying he was “confounded” by the opportunity and was attracted to the trading houses’ dividend growth.
In 2023, Buffett even paid a visit to Japan with his designated successor Greg Abel and met with the heads of the Japanese firms. He said he’d like Berkshire to own the companies forever.
The student of famed investor Benjamin Graham has been aggressively selling U.S. stocks and growing his record cash pile to $334 billion. Berkshire sold more than $134 billion worth of stocks in 2024, largely by shrinking the size of Berkshire’s two largest equity holdings — Apple and Bank of America.
Check out the companies making headlines before the bell. Norwegian Cruise Line — Shares of the cruise operator rose 4% on the back of an upgrade from JPMorgan to overweight from neutral. The firm is bullish on the company, citing that its management has indicated no change in booking curves and cancellation rates, or cracks in onboard spend levels. Incyte — The pharmaceutical stock fell more than 14% after the release of phase three trial data for a skin condition treatment. Incyte said that the trials of its drug met the primary endpoints. However, the drug was effective for less than half of the participants who took it in the trials. Netflix — The streaming giant advanced 1.5% on the back of MoffettNathanson’s upgrade to buy from neutral. The firm said Netflix can monetize more than previously expected, in turn growing profit. Affirm — The buy now, pay later stock dipped 13% after CNBC reported that rival Klarna will be the exclusive provider of such loans for Walmart . This takes away a coveted partnership from Affirm, whose chief revenue officer Wayne Pommen referred to Walmart and partnerships with big merchants such as Amazon and Target as its “crown jewel partnerships.” Nvidia — Shares of Nvidia edged 1.5% higher as investors picked up shares of the chipmaking giant, which has tumbled more than 12% over the past month. Sprouts Farmers Market — The food retailer added 1% on the back of an upgrade at Deutsche Bank to buy from hold. The bank said the stock’s recent 23% pullback has provided a good entry point. It believes Sprouts’ same-store sales momentum is sustainable and sees margin expansion opportunities. Berkshire Hathaway — Warren Buffett’s Berkshire Hathaway dipped just 0.1% after it upped its stake in Japanese trading houses Mitsubishi , Itochu , Sumitomo , Marubeni and Mitsui , according to regulatory filings. — CNBC’s Jesse Pound, Lisa Han, Michelle Theobald, Alex Harring contributed reporting.
Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg via Getty Images
Swedish fintech firm Klarna will be the exclusive provider of buy now, pay later loans for Walmart, taking a coveted partnership away from rival Affirm, CNBC has learned.
Klarna, which just disclosed its intention to go public in the U.S., will provide loans to Walmart customers in stores and online through the retailer’s majority-owned fintech startup OnePay, according to people with knowledge of the situation who declined to be identified speaking about the partnership.
OnePay, which updated its brand name from One this month, will handle the user experience via its app, while Klarna will make underwriting decisions for loans ranging from 3 months to 36 months in length, and with annual interest rates from 10% to 36%, said the people.
The new product will be launched in the coming weeks and will be scaled to all Walmart channels by the holiday season, likely leaving it the retailer’s only buy now, pay later option by yearend.
The move heightens the rivalry between Affirm and Klarna, two of the world’s biggest BNPL players, just as Klarna is set to go public. Although both companies claim to offer a better alternative for borrowers than credit cards, Affirm is more U.S.-centric and has been public since 2021, while Klarna’s network is more global.
The deal comes at an opportune time for Klarna as it readies one of the year’s most highly-anticipated IPOs. After a dearth of big tech listings in the U.S. since 2021, the Klarna IPO will be a key test for the industry. It’s private market valuation has been a rollercoaster: It soared to $46 billion in 2021, then crashed by 85% the next year amid the broader decline of high-flying fintech firms.
CEO Sebastian Siemiatkowski has worked to improve Klarna’s prospects, including touting its use of generative AI to slash expenses and headcount. The company returned to profitability in 2023, and its valuation is now roughly $15 billion, according to analysts, nearly matching the public market value of Affirm.
For Affirm, the move is likely to be seen as a blow at a time when tech stocks are particularly vulnerable. Run by CEO Max Levchin, a PayPal co-founder, the company’s stock has surged and fallen since its 2021 IPO. The lender’s shares have dipped 18% this year.
Affirm executives frequently mention their partnerships with big merchants as a key driver of purchase volumes and customer acquisition. In November, Affirm chief revenue officer Wayne Pommen referred to Walmart and other tie-ups including those with Amazon, Shopify and Target as its “crown jewel partnerships.”
An Affirm spokesman declined to comment.
Everything app
The deal is no less consequential to Walmart’s OnePay, which has surged to a $2.5 billion pre-money valuation just two years after rolling out a suite of products to its customers.
The startup now has more than 3 million active customers and is generating revenue at an annual run rate of more than $200 million.
As part of its push to penetrate areas adjacent to its core business, Walmart executives have touted OnePay’s potential to become a one-stop shop for Americans underserved by traditional banks.
Walmart is the world’s largest retailer and says it has 255 million weekly customers, giving the startup — which is a separate company backed by Walmart and Ribbit Capital — a key advantage in acquiring new customers.
Last year, the Walmart-backed fintech began offering BNPL loans in the aisles and on checkout pages of Walmart, CNBC reported at the time. That led to speculation that it would ultimately displace Affirm, which had been the exclusive provider for BNPL loans for Walmart since 2019.
OnePay’s move to partner with Klarna rather than going it alone shows the company saw an advantage in going with a seasoned, at-scale provider versus using its own solution.
The Walmart logo is displayed outside their store near Bloomsburg.
Paul Weaver | Lightrocket | Getty Images
OnePay’s push into consumer lending is expected to accelerate its conversion of Walmart customers into fintech app users. Cash-strapped consumers are increasingly relying on loans to meet their needs, and the installment loan is seen as a wedge to also offer users the banking, savings and payments features that OnePay has already built.
Americans held a record $1.21 trillion in credit card debt in the fourth quarter of last year, about $441 billion higher than balances in 2021, according to Federal Reserve Bank of New York data.
Next up is likely a OnePay-branded credit card offered with the help of a new banking partner after Walmart successfully exited its partnership with Capital One.
“We’re looking forward to going down this new path where not only can they provide installment credit … but also revolving credit,” Walmart CFO John David Rainey told investors in June.
— CNBC’s MacKenzie Sigalos and Melissa Repko contributed to this report.