Chinese companies report 26% profit surge in Q2 2026 as AI boom clashes with falling stock prices

Chinese companies just posted their best quarterly earnings in nearly five years. The stock market’s response? A collective shrug followed by a sell-off. Onshore-listed Chinese firms reported a 25.7% year-on-year profit increase in Q2 2026, a number that would normally have investors popping champagne. Instead, the CSI 300 Index fell roughly 9% over the same period, while the tech-heavy Star 50 Index cratered by 29%. AI is doing the heavy lifting IT sector profits exploded by 142% year-on-year in Q2 2026, driven by the rapid commercialization of artificial intelligence across hardware, semiconductors, and enterprise applications. Electronics companies weren’t far behind, with profits climbing approximately 97% on the back of demand for AI computing infrastructure. Goldman Sachs pegged overall Chinese corporate profit growth at roughly 24% for the quarter, calling it a five-year high. The investment bank noted that AI momentum is now transitioning from a pure hardware buildout phase into broader enterprise applications. SenseTime, the AI-focused company that had been bleeding cash for years, turned profitable during the quarter. For the first half of 2026, industrial enterprise prof...