Lenovo Partners With Nvidia On Data Centers, Week in Review
6 Min. Read Time
Week in Review
- Asian equities were mostly lower for the week, though India and the Philippines managed gains, while Indonesia and Korea experienced steep drawdowns.
- This week saw a sell off in AI hardware supply chain stocks, i.e. AI "picks and shovels", while, in China, we saw a rotation into internet-based hyperscalers like Alibaba and Tencent.
- A low base in the third quarter of 2025 and improving profitability made for positive pre-earnings comments from Alibaba and Meituan as we head into third quarter 2026 internet season next month.
- Mainland China's largest company by market cap, memory chip maker CXMT, sent Korea's SK Hynix and Samsung and the US' Micron all lower on Tuesday with the release of its latest chip.
- China's exports of integrated circuits increased 136% year-over-year in September, according to a data release on Thursday.
Friday's Key News
Asian equities were mostly higher overnight, as the Philippines and Japan outperformed, while Indonesia and Malaysia underperformed.
Hong Kong outperformed Mainland China overnight, as the Hang Seng Tech index and internet stocks led gains. Meanwhile, in Mainland China, the Shanghai outperformed the tech-heavy Shenzhen and STAR (Science & Technology) Market, as the latter two markets were mostly flat. We appeared to get a slight reprieve from the aggressive sell-off in AI "picks and shovels" overnight, but these stocks did not come back in a big way, either. Mainland investors sold a net $456 million worth of Hong Kong-listed stocks and ETFs, as Alibaba and Z.AI were sold on strength.
Lenovo surged 8% overnight after announcing a partnership with Nvidia to bring its Vera Rubin data center platform to AI cloud providers globally. This is an exciting development and is definitely an endorsement of the China-based Lenovo as a leader in the data center industry. The below quotes are from Lenovo's press release, which included a quote from NVIDIA executive Chris Marriott. This could also strengthen the case to reduce export controls on high-end NVIDIA chips to China, which would be highly positive for internet companies such as Alibaba and Tencent.
"The AI race is no longer just about deploying GPUs. It's about how quickly providers can transform power, space and infrastructure investments into operational AI capacity and revenue," said Conor Malone, Vice President & GM, Cloud Service Providers, Lenovo. "Lenovo AI Cloud Gigafactory with Nvidia brings together advanced AI infrastructure with Lenovo’s global manufacturing and deployment expertise, including capabilities at our North Carolina Smart Campus, to help customers build AI factories faster, scale with confidence, and unlock business value sooner."
“The next generation of AI cloud will require full-stack, rack-scale infrastructure designed for increasingly complex reasoning, inference and agentic AI workloads,” said Chris Marriott, Vice President of Enterprise Platforms and Solutions at Nvidia. “By bringing the Nvidia Vera Rubin Platform to Lenovo AI Cloud Gigafactory, Lenovo is helping cloud providers reduce deployment complexity, scale with confidence and turn infrastructure investments into revenue-ready AI capacity faster.”
Health care did well in Hong Kong, though the sector stumbled on the Mainland. We believe biotechnology is the next significant beneficiary of AI and China's firms are well positioned to see increased demand for molecule and treatment testing, as AI-generated bitoech hypotheses scale up.
Alibaba gained +2% on its improving earnings outlook. Meanwhile, digital marketing platform Baozun gained +11% on an improved earnings outlook and the announcement of a strong buyback program, worth $10 million. Also, real estate was a top-peroforming sector in both Hong Kong and Mainland China. All of these are positive signs for consumption!
Last Night's Performance
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.69 versus 6.69 yesterday
- CNY per EUR 7.52 versus 7.50 yesterday
- Yield on 10-Year Government Bond 1.65% versus 1.66% yesterday
- Yield on 10-Year China Development Bank Bond 1.70% versus 1.71% yesterday
- Copper Price 0.44%
- Steel Price 0.07%
