DeepSeek’s rise is the catalyst that will prompt global investors to allocate more toward Chinese stocks, even as economic worries persist, analysts predict. “Before the overarching talk was, China is uninvestible. … Now you definitely see people start thinking it probably helps to have China,” said Liqian Ren, leader of quantitative investment at WisdomTree. It’s a realization that “the macro environment can be still cool in China and you still see innovation,” Ren said, adding she expects progress in the next few years in Chinese drug development and other areas. “DeepSeek is the tip of what’s likely to come.” The Chinese AI startup released an open-source model in January that surprised many U.S. tech investors with the ability to share its thought process and claims to undercut OpenAI drastically on costs — despite U.S. export controls on advanced semiconductors. High-flying U.S. chip giant Nvidia plunged about 17% on Jan. 27 in its worst day since 2020 as global tech stocks dropped . The development “raises questions about the vast sums that are currently being invested in AI and whether it will turn out to be money well spent,” David Chao global market strategist, Asia Pacific, ex-Japan, at Invesco, said in a Feb. 3 note. “I expect the current high concentration in the US stock market to be a temporary phenomenon.” “I would just add that it favors an equally weighted approach to the US market, US small-mid caps over mega caps and Chinese equities vs US equities,” he said. “Chinese equities, and especially Chinese technology companies are priced at a steep discount compared to their American counterparts, and similar to the AI development gap narrowing, so too is the valuation gap.” DeepSeek shows how some Chinese tech giants can build AI models comparable to U.S. ones, “which can be tactically bullish for MSCI China on the back of subdued valuation, light positioning, and recovering earnings cycle,” Louis Luo, head of multi-asset investment solutions, Greater China, abrdn, said in a Feb. 5 note. The MSCI China index includes Hong Kong and mainland-traded stocks. While DeepSeek is not publicly listed, investment analysts expect several Chinese stocks can benefit from local AI development. “Kingdee and Kingsoft Office remain our top names to gain exposure to the AI themes,” Bernstein’s Boris Van and Ting Ming Neo said in a Feb. 5 report. They expect Hong Kong-listed software company Kingdee can benefit due to its large base of small and medium-sized businesses, strong product positioning and subscription model. “The stock is well positioned for a macro recovery should private enterprise budgets resume later in the year, presenting upside to current estimates, with the AI story largely not yet priced in today,” the Bernstein analysts said. They are more cautious in the near term about Shanghai-listed Kingsoft Office, operator of word-processing app WPS, due to uncertainty about how its enterprise AI business can succeed. “Long term AI winner but find the right entry point in 1H,” the analysts said. They rate both stocks outperform. Within China stocks likely to benefit from rising AI adoption, J.P. Morgan China equity strategists also like Kingdee more than Kingsoft Office. “DeepSeek’s low cost and quality AI data infrastructure should help raise the installation and revenue base for AI enabled software applications,” they said in a Feb. 3 note. The firm highlighted Kingdee as a preferred pick. They pointed out that while businesses have not spent much on software due to slow growth, government offices in China have been digitizing data and processes to improve efficiency. The J.P. Morgan China strategists also expect increased availability of AI applications to encourage consumers to buy new smartphones more frequently. Among the publicly-traded Chinese players, they like Hong Kong-listed Xiaomi the best as they expect Lenovo will be more affected by tariffs. The team rates Xiaomi overweight. HSBC analysts on Feb. 6 raised their revenue estimates for Xiaomi partly on expectations of better smartphone and connected home appliance sales. They pointed out that Xiaomi has an in-house AI large model team and strategic cooperation with Kingsoft Cloud and AI startup MiniMax. “With the rise of low-cost models such as DeepSeek-R1 and the gradual maturity of AI computing infrastructures, we believe Xiaomi will benefit as one of the top global edge AI players,” the HSBC analysts said, referring to on-device AI. More interest outside the state sector Chinese stocks still face U.S. tariff uncertainty, and questions remain about how quickly the world’s second-largest economy can grow this year without sufficient support. WisdomTree’s Ren cautioned that China investors might face “very painful” periods due to the barrage of headline-driven volatility. She added that new buyers are likely increasing their allocation from emerging markets rather than U.S. stocks. But there are other indications that the winds have shifted. Interest in China started to pick up after Beijing’s stimulus announcements in late September, Ren pointed out. What’s different now, she said, is that DeepSeek’s latest artificial intelligence breakthroughs are showing innovation coming out of China’s private, non-state owned sector. The WisdomTree China ex-State-Owned Enterprises Fund (CXSE) was up nearly 4% for the year as of Thursday’s close. In contrast, a Bosera ETF for tracking high yielding state-owned enterprise stocks was down more than 3.5% over that time. That’s after state-owned enterprises traded in mainland China outperformed non-state-owned ones for three straight years , according to Allianz Global Investors. — CNBC’s Michael Bloom contributed to this report.
Leading analyst Craig Moffett suggests any plans to move U.S. iPhone assembly to India is unrealistic.
Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported Apple was aiming to shift production toward India from China by the end of next year.
He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.
“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree,” the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work.”
Moffett contends it’s not so easy to diversify to India — telling clients Apple’s supply chain would still be anchored in China and would likely face resistance.
“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue,” he wrote to clients.
Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet.
“I don’t think of myself as the biggest Apple bear,” he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company.”
Moffett has had a “sell” rating on Apple since Jan. 7. Since then, the company’s shares are down about 14%.
“None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise,” he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.”
Moffett notes Apple also isn’t getting help from its carriers to cushion the blow of tariffs.
“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T. Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handsets,” he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates — all of which probably trims estimates next year’s consensus.”
According to Moffett, the backlash against Apple in China over U.S. tariffs will also hurt iPhone sales.
“It’s a very real problem,” Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple.”
Apple stock is coming off a winning week — up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due next Thursday after the market close.
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In a year that hasn’t been kind to many big-name stocks, Warren Buffett’s Berkshire Hathaway is standing near the top. Berkshire shares have posted a 17% return year-to-date, while the S&P 500 index is down 6%.
That performance places Berkshire among the top 10% of the U.S. market’s large-cap leaders, and the run has been getting Buffett more attention ahead of next weekend’s annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska. It’s also good timing for the recently launched VistaShares Target 15 Berkshire Select Income ETF(OMAH), which holds the top 20 most heavily weighted stocks in Berkshire Hathaway, as well as shares of Berkshire Hathaway.
“It’s a really well-balanced portfolio chosen by the most successful investor the world has ever seen,” Adam Patti, CEO of VistaShares, said in an appearance this week on CNBC’s “ETF Edge.”
Berkshire’s outperformance of the S&P 500 isn’t limited to 2025. Buffett’s stock has tripled the performance of the market over the past year, and its 185% return over the past five years is more than double the performance of the S&P 500.
Berkshire Hathaway is one of 2025’s top performing stocks.
In addition to this long-term track record of success in the market, Berkshire Hathaway is getting a lot of attention right now for the record amount of cash Buffett is holding as he trimmed stakes in big stocks including Apple, which has proven to be a great strategy. The S&P 500 has experienced extreme short-term volatility since President Donald Trump’s inauguration on January 20. Even after a recent recovery, the S&P is still down 8% since the start of Trump’s second term.
“The market has been momentum driven for many years, the switch has flipped and we’re looking at quality in terms of exposure, and Berkshire Hathaway has performed incredibly well this year, handily outperforming the S&P 500,” said Patti.
Berkshire Hathaway famously doesn’t pay a dividend, with Buffett holding firm over many decades in the belief that he can re-invest cash to create more value for shareholders. In a letter to shareholders in February, Buffett wrote that Berkshire shareholders “can rest assured that we will forever deploy a substantial majority of their money in equities — mostly American equities.”
The lack of a dividend payment has been an issue over the years for some shareholders at Berkshire who do want income from the market, according to Patti, who added that his firm conducted research among investors in designing the ETF. “Who doesn’t want to invest like Buffett, but with income?” he said.
So, in addition to being tied to the performance of Berkshire and the stock picks of Buffett, the VistaShares Target 15 Berkshire Select Income ETF is designed to produce income of 15% annually through a strategy of selling call options and distributing monthly payments of 1.25% to shareholders. This income strategy has become more popular in the ETF space, with more asset managers launching funds to capture income opportunities and more investors adopting the approach amid market volatility.
People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.
Frederic J. Brown | Afp | Getty Images
A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.
The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.
In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.
Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.
Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.
“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”
“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.
He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.
“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”
The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.
“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”
Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.
Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.
Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.