Trump and Xi face pressure to protect AI market rally

Tuesday 12 May 2026 - 13:54

By: Dakir Madiha

Trump and Xi face pressure to protect AI market rally

Investors are urging Donald Trump and Xi Jinping to avoid escalating technology and trade tensions during this week’s summit in Beijing, as global markets continue to rally around artificial intelligence. The two leaders are expected to meet on May 14 and 15 in what marks Trump’s first official visit to China since 2017. Market participants are closely watching the talks, fearing that new restrictions on semiconductors or AI infrastructure could disrupt momentum across Asian technology stocks.

Chinese chipmakers and AI-linked companies extended gains ahead of the summit. Investors remain focused on rising demand for AI computing infrastructure, cloud services and advanced semiconductors. Technology benchmarks in China and Hong Kong have reached multi-month highs in recent weeks, driven by expectations that AI adoption will continue accelerating across industries despite geopolitical uncertainty. Analysts say the recent rally reflects a broader shift in investor behavior, with capital flowing back into Chinese growth sectors after a prolonged period dominated by concerns over regulation and trade disputes.

Financial institutions expect the AI boom to continue attracting large inflows. Morgan Stanley recently projected that more than $1 billion could move into the Hang Seng Tech Index as additional Chinese AI companies prepare to join the benchmark in June. Semiconductor stocks have also benefited from the global AI expansion. The Philadelphia Semiconductor Index has surged sharply since late March, posting one of its strongest short-term performances in decades. Investors increasingly view AI as a structural growth driver capable of sustaining earnings growth even during periods of diplomatic tension.

Despite the optimism, several unresolved issues remain at the center of the summit agenda. The United States is expected to raise export controls on advanced chips and AI hardware, while China may push back against restrictions targeting its semiconductor sector. Rare earth minerals are also expected to feature prominently in discussions after earlier export limitations became a major source of friction between both countries. Analysts warn that renewed restrictions from either side could quickly affect supply chains tied to AI servers, chip production and consumer electronics.

Artificial intelligence itself has also become a diplomatic issue. Officials from both governments are reportedly considering the creation of formal communication channels dedicated to AI governance and risk management. Discussions could include future cooperation on safety standards for advanced AI systems, although policy experts remain skeptical about the chances of major breakthroughs during this visit. Expectations for the summit remain modest, with many analysts anticipating limited agreements focused on agriculture, aircraft purchases and maintaining stable communication rather than resolving deeper technological disputes.

For investors heavily exposed to AI-related equities, stability may be enough. Markets appear less interested in sweeping geopolitical deals than in avoiding new shocks capable of disrupting one of the strongest technology rallies in recent years.