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Alibaba’s AI Launch & Earnings Roundup: ASML, Tesla, Meta

While the week of 26 January isn't over yet, it's already been a notable one, especially in the tech sector. Key events are unfolding, and more are expected in the coming days. 

Let’s take a closer look at the latest updates from the world of tech:

Computer screens with graphs and charts on them in a busy office

Alibaba’s Qwen 2.5: Has DeepSeek-V3 Met Its Match?

The inexpensive Chinese artificial intelligence (AI) model DeepSeek has undoubtedly sent ripples across the tech market in the past couple of days. On Monday, AI darling Nvidia lost an astounding 17% and led losses across the tech-heavy Nasdaq before it rebounded by gaining over 8% on Tuesday. Moreover, DeepSeek has recently seen a significant surge in web traffic, reaching 6 million visitors.

While the long-term success of this Chinese innovation remains uncertain, many tech companies are already racing to rival it, with Chinese tech giant Alibaba among them. 

On Wednesday, 29 January, Alibaba unveiled the latest version of its proprietary AI model, Qwen 2.5. The company claims it has “outperformed” “almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405.” (Source: Yahoo Finance)

Notably, the timing of the release coincides with the first day of the Chinese Lunar New Year, when most people are typically off work and on holiday. This strategic move could suggest a sense of urgency behind the launch, as well as the growing pressure DeepSeek, which competes with OpenAI’s ChatGPT, is placing on other companies. 

How Did BABA React?

Perhaps unsurprisingly, BABA stock gained 6.9% on the news yesterday, and it would be interesting to see how far it will rise or fall in the days to come after investors digest this AI release.

Earnings Results: ASML Sees Surge in Demand for Chipmaking Tools

“The biggest supplier of computer chip-making equipment,” ASML, reported earnings on Wednesday, 29 January. 

The results revealed a surge in demand for the company's chipmaking tools, with Q4 bookings hitting 7.088 billion euros, compared to analysts' projected 3.99 billion euros. 

This substantial gain could reassure ASML traders and other chip stock investors that demand for chips essential for AI remains strong, despite this week's selloff triggered by the launch of an AI model by Chinese company DeepSeek, which requires less computing power than its competitors.

According to CEO Christophe Fouquet, "the growth in artificial intelligence is the key driver for growth in our industry.”

Meta & Tesla Earnings Previews

Both Meta and Tesla are set to report earnings this week today, after the ring of the bell, and here’s what you need to know ahead of the release:

Meta

  • Analysts will be looking for signs of returns on Meta's significant AI investments, as the company plans to spend $60-$65 billion on AI infrastructure in 2025, including a massive data centre project. This represents a substantial increase from the previously projected $38-$40 billion in capital expenditures for 2024. 

  • Analysts expect Meta to report earnings per share of $6.75 and revenue of $46.9 billion in Q4, up from $5.33 per share and $40.1 billion in the same period last year. 

  • Advertising revenue is also expected to rise from $38.7 billion to $45.6 billion.

Tesla

  • Analysts expect Tesla to report Q4 revenue of $27.21 billion (up 8.1% YoY) and adjusted EPS of $0.75, translating to $2.67 billion in adjusted net income.

  • Tesla has been using price cuts to drive EV sales and plans to launch a lower-priced EV in early 2025. Wall Street is awaiting updates on this and other new vehicle timelines to boost growth.

  • Tesla stock surged at the end of 2024 following President Donald Trump’s election win but has since dropped 5% to start the year, suggesting a potential post-hype reality.

  • Not all analysts are optimistic. Some highlight regulatory bottlenecks in the path to self-driving vehicles and robotaxis, particularly from state and local authorities. There are also concerns about potential negative impacts from Trump’s administration, such as removing the federal EV tax credit and scrapping CO2 emissions targets, which could harm EV sales.

Conclusion

In conclusion, the week of 26 January has already proved to be a pivotal one for the tech sector, with significant developments shaping the industry’s landscape. From Alibaba’s release of Qwen 2.5, signalling intense competition in the AI space, to ASML’s better-than-expected earnings, highlighting strong demand for chipmaking tools, the momentum is palpable. 

Meanwhile, Meta and Tesla are preparing to reveal their earnings, with investors closely monitoring the impact of their AI investments and new product launches.

As these companies continue to innovate and navigate challenges, the next few days will likely offer valuable insights into the possible direction of the tech market. 

Still, it is important to remember that past performance does not reflect future results and that only time will tell what lies ahead for these industry giants.

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