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Luke Kawa

Nvidia tumbles as China pushes toward an AI boom without the US juggernaut

What does an AI boom look like without Nvidia at its epicenter?

More and more, it seems that China is willing to test out those uncharted waters.

Shares of the $4 trillion chip designer are down more than 3% in early trading after The Wall Street Journal reported that Alibaba is developing a chip for AI inference tasks manufactured domestically, the latest in a series of signs that the country is looking to wean itself off of any dependence on Nvidia and US technology to develop its AI capabilities.

The Chinese AI market is of no small import to Nvidia. On the conference call following earnings this week, CEO Jensen Huang called it a $50 billion opportunity that he expects to grow at 50% per year.

But China has reportedly told its leading tech companies to forgo purchases of Nvidia’s H20 chips, citing data security concerns. These allegations regarding data security have been denied by Nvidia, and appear to reflect China’s desire to avoid having its AI development be beholden to the whims of US policymakers.

Nvidia had been effectively locked out of China’s AI market since mid-April, when export curbs were enacted, and didn’t receive licenses to ship H20 processors to the world’s second-largest economy until August. The chip designer reportedly halted production of these chips recently, which suggests that China’s directive to its tech giants has some teeth.

Without access to the most advanced technology, China will have to effectively make up for what it lacks in ability with volume.

This news also comes as other, smaller Chinese chipmakers begin to capture more attention from domestic investors. Cambricon, for instance, soared 15% to a record high earlier this week after reporting surging sales growth. Its share price more than doubled in a span of less than three weeks. Per the Financial Times, Chinese officials have told their biggest domestic chipmaker, SMIC, to devote some more capacity to Cambricon rather than give all the availability to Huawei Technologies, which is currently the country’s most advanced AI chip developer.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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