To The Moon

$Alibaba(BABA)$ $TENCENT(00700)$ The spotlight shines on China’s tech giants as Tencent Holdings (0700.HK) and Alibaba Group (9988.HK) prepare to unveil their interim reports this week, with Tencent reporting on Wednesday, August 13, 2025, and Alibaba on Friday, August 15, 2025. These heavyweights of the Hang Seng Index, which has climbed 2.3% recently, are poised to influence a potential $44 billion rally in China’s tech sector. With the S&P 500 at 6,297.36 and Nasdaq at 20,884.27 reflecting global bullishness, yet tariffs (30% on EU/Mexico, 35% on Canada) and geopolitical tensions (Israel-Iran conflict, oil at $75/barrel) adding uncertainty, the stakes are high. Can Tencent and Alibaba’s earnings deliver the growth to fuel further gains, or will challenges dim the outlook? This analysis dives into the earnings expectations, market dynamics, and trading strategies to seize the moment.

Earnings Preview: Growth or Gloom?

Tencent Holdings (0700.HK)

• Forecast: Analysts expect Q2 2025 revenue of $24.81 billion (up 10% YoY) and EPS of $0.913, building on a strong Q1 2025 where revenue hit $24.96 billion (up 12% YoY) and EPS was $0.913, per market data.

• Catalysts: Advertising revenue is projected to rise 17% due to macroeconomic recovery, while gaming (e.g., Honor of Kings) and cloud services (AI-driven growth) could add $2-$3 billion. DeepSeek’s AI breakthrough in February may boost guidance.

• Challenges: Capex cuts amid semiconductor restrictions and a 2.73% premarket dip to HKD 535.0 (from HKD 550) suggest caution. Profit margins might shrink 2-3% due to tariff-related costs.

• Outlook: A beat could push the stock to HKD 580, but a miss might see it test HKD 500.

Alibaba Group (9988.HK)

• Forecast: Q1 2026 (calendar Q2) revenue is anticipated at $35.5 billion (up 8% YoY) and EPS of $2.30, following a Q4 2025 revenue of $37.4 billion (up 7%) and EPS of $2.17, per analyst estimates.

• Catalysts: Cloud computing revenue is expected to jump 17%, with AI innovations like Amap2025 and Qwen3 models driving $1-$2 billion. E-commerce (Taobao, Tmall) could see 10% growth from stimulus measures.

• Challenges: U.S.-China trade talks and a 53% YTD rise to HKD 130 (from HKD 85) signal overbought conditions (RSI 72). Tariffs may cut margins by 5%.

• Outlook: A strong report could lift it to HKD 140-$150, but a weak cloud segment might drop it to HKD 120.

Both firms’ AI investments and domestic focus (90% of Tencent’s revenue from China) are key, but tariff uncertainties and capex constraints could temper gains.

Market Dynamics: A Tech Rally at Risk

The Hang Seng Tech Index’s 30% earnings estimate rise over the past year outpaces broader markets, yet it’s 14% below its March peak, per market sentiment. Posts on X reflect optimism about AI and stimulus but worry over trade tensions. Lower short interest (under 0.1% for both) and reduced downside hedge demand in options markets signal confidence, though August volatility (VIX 15.94) and a potential 7-10% pullback loom. Tencent’s HKD 4903.6 billion market cap and Alibaba’s HKD 2800 billion underscore their influence.

Trading and Investment Strategies

Short-Term Plays

• Buy Tencent on Dip: Enter at HKD 520-$530, target HKD 580-$600, stop at HKD 500. A 10-15% gain if AI beats.

• Buy Alibaba on Pullback: Grab at HKD 125-$128, target HKD 140-$150, stop at HKD 120. A 10-15% gain on cloud strength.

• Options Straddle: Buy HKD 535 calls/puts on Tencent or HKD 130 calls/puts on Alibaba (August expiry) for volatility, targeting 200-300% gains on a 10%+ move.

• Scalp IHG: Buy at HKD 85-$87, sell at HKD 95-$100, stop at HKD 82. A 9-15% gain on luxury travel demand.

Long-Term Investments

• Hold Tencent: Buy at HKD 520-$530, target HKD 650-$700 by 2026, for 20-35% upside with AI leadership. Stop at HKD 480.

• Hold Alibaba: Buy at HKD 125-$128, target HKD 160-$180 by 2026, for 20-40% upside with e-commerce. Stop at HKD 115.

• Hold JD.com (9618.HK): Buy at HKD 120-$125, target HKD 140-$150, for 12-20% upside with logistics. Stop at HKD 110.

• Diversify with XSOE ETF: Buy at $30, target $35, stop at $28, for emerging market exposure.

Hedge Strategies

• VIXY ETF: Buy at $15, target $18, stop at $13, to hedge tariff or pullback risks.

• SPY ETF Puts: Use puts at $614 to protect against a 5-10% S&P 500 drop.

• Gold ETF ( $SPDR Gold Shares(GLD)$ ): Buy at $200, target $220, stop at $190, as a safe-haven hedge.

My Trading Plan

I’m cautiously bullish, targeting HKD 580-$600 for Tencent and HKD 140-$150 for Alibaba by late August if earnings beat expectations. I’ll buy Tencent at HKD 520-$530, targeting HKD 580-$600, with a HKD 500 stop, and Alibaba at HKD 125-$128, targeting HKD 140-$150, with a HKD 120 stop. I’ll use a HKD 535/130 call/put straddle for volatility. For diversification, I’ll add JD.com at HKD 120-$125, targeting HKD 140, with a HKD 110 stop, and XSOE at $30, targeting $35, with a $28 stop. I’m hedging with VIXY at $15, targeting $18, and keeping 20% cash for dips if tariffs or weak data hit. I’ll watch earnings calls and trade talks for signals.

Key Metrics

The Bigger Picture

Tencent and Alibaba’s interim reports on August 13 and 15, 2025, could be catalysts for a China tech rally, with projected revenue growth of 10% and 8% respectively, driven by AI and e-commerce. The Hang Seng Tech Index’s resilience amid tariff pressures and a VIX at 15.94 suggests upside potential, but a 7-10% pullback risk looms. Strong earnings could push Tencent to HKD 600 and Alibaba to HKD 150, while misses might test HKD 500 and HKD 120. Investors should buy on dips, leverage options for volatility, and hedge with VIXY or GLD to manage risks. The China tech story is heating up—position now to win big.

Are you betting on Tencent or Alibaba to lead the charge? Share your trade plan below! 🎁

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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