Tariff fallout hits US tech. Markets ended the holiday-shortened week mostly down with the S&P 500 and NASDAQ down -1.5% and -2.6% respectively, driven by losses in the tech sector amid new US-China chip export restrictions. Comments from Fed Chair Powell added to the negative sentiment as he warned of a larger-than-anticipated economic fallout from tariffs—signalling a pause on rate cuts—and citing the need for greater clarity. Europe equities, on the other hand, rebounded strongly with the STOXX 600 up 4.0% as easing trade tensions and dovish signals from ECB boosted investor sentiment (along with a 25 bps rate cut).
Over in Asia, China equities advanced on expectations of an upcoming stimulus with the Hang Seng and Shanghai Composite up 2.3% and 1.2% respectively. China‘s 1Q GDP beat estimates at 5.4%, although this was likely due to the front loading of exports, ahead of US tariffs. Japan equities posted solid gains with the Nikkei 225 up 3.4%, supported by hopes for a deal in the ongoing US-Japan trade talks, along with a cautious BOJ policy signal.
Topic in focus: Global AI agents – New frontier for SaaS and Chinese hyperscalers. AI agents are emerging as transformative tools for enterprises with distinct use cases across Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems. ERP providers benefit from automation and cost efficiency, making AI a core enabler for complex workflows. In contrast, CRM providers leverage AI for enhanced customer interactions and user experience, supporting brand differentiation. This bifurcation in use cases is reflected in enterprise adoption trends as automation-focused firms prefer ERP-based AI, while customer-centric businesses gravitate toward CRM AI. Salesforce’s Agentforce exemplifies this shift, reducing per-interaction costs to as low as USD0.65, thereby improving gross margins to 60–70%. Its AgentExchange marketplace further accelerates adoption by enabling plug-and-play solutions without the need for intensive in-house development.
In addition to SaaS application providers, hyperscalers such as Alibaba, Amazon, and Microsoft play a critical role by supplying the necessary compute, storage, and AI infrastructure. Recent earnings from Salesforce, SAP, and Alibaba point to strong momentum driven by AI and cloud adoption. Salesforce reported a 120% y/y growth in Agentforce and Data Cloud ARR, SAP guided for 26–28% cloud revenue growth, and Alibaba is forecasted to deliver an 18% CAGR in cloud revenue over FY25F-FY27F. Moreover, Alibaba is poised to monetise its consumer and business AI solutions, including Qwen Chat and Dingtalk. Globally, SaaS firms and Chinese hyperscalers are best positioned to monetise AI agent deployment at scale, offering compelling upside as adoption deepens.
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