Wall Street is always searching for the next big thing, and the latest mega IPO in Shanghai is tantalizing for investors—but they shouldn’t give up on U.S. stocks just yet.

Shares of Chinese humanoid-robot maker Unitree rose more than fivefold in its debut on Wednesday, giving it a market value of about $53 billion. It’s another notable IPO after memory-chip company CXMT listed in July and less than a month later became China’s largest onshore-listed company.

A switch from American to Chinese plays might look superficially attractive. The U.S. AI infrastructure trade has become crowded and vulnerable to reversals—such as Tuesday’s slump, which took the PHLX Semiconductor Index down 5%. The data-center backlash is intensifying stateside. Pennsylvania became the latest state to impose strict rules on developers Tuesday, in contrast to China’s government-backed buildout. 

But we’ve been here before with Chinese tech, which frequently looks like a game changer before political realities intervene. Entrepreneurs such as Alibaba founder Jack Ma have found out to their cost that Communist Party interests take precedence over profits. If you think Chinese developers undercutting the price of AI models is bad, wait until you see what they do with robots. 

Even if market momentum does switch toward robots as the next shiny new thing, there should still be upside for the existing AI plays. Plenty of S&P 500 stocks will benefit from the growth of robots. AI processor leader Nvidia and memory-chip maker Micron Technology have both pointed to robotics as the next big market and have more advanced tech than their Chinese counterparts. It could also be the savior of Tesla—at least CEO Elon Musk thinks so, as he repurposes vehicle-manufacturing space for Optimus humanoid robots.

The U.S.-China race for superiority in AI and robots is fiercely competitive but when it comes to which market provides safety for American investors, there’s no contest—stick close to home.

—Adam Clark

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The AI craze is supercharging returns in convertible bonds. At just under $500 billion of issuance, they are a small corner of the bond market, but have gotten a lot of attention because of a wave of issuance by tech firms, including neoclouds like CoreWeave and Nebius and hyperscalers like Oracle. 

• The hybrid securities offer steady bondlike payouts and the chance to convert the security into a stock if the issuer’s stock climbs high enough. Issuers sold nearly $90 billion in convertible bonds in the second quarter, Dealogic says, up 80% from a year ago and the strongest quarter on record.

• Convertibles offer the downside protection of a bond, such as the promise to get principal back, without sacrificing potential upside if stock prices rocket higher. Borrowers, including tech companies, favor them because they allow issuers to lock in interest rates that compare favorably to traditional bonds.

• The AI gold rush has transformed the space, with roughly 30% of global convertible bonds tied to AI, according to BofA Global Research. AI’s lopsided presence in the market provides big opportunities—and risks for investors, just as AI has transformed the risk/reward profile of utilities and South Korean stocks.

• BofA Securities analyst Michael Youngworth believes convertibles represent a unique opportunity, and that given AI’s long-term potential investors can’t afford to sit out the trade. He’s saying they’re a less risky bet than owning AI stocks directly. But he isn’t saying they are less risky than a diversified stock portfolio.

What’s Next: The Calamos Convertible Fund, up 23% this year, is among those that have benefited from the big run up in convertible prices. About 31% of its assets are in tech securities. Still, the fund has been dialing back its exposure, said co-portfolio manager Joe Wysocki, trimming securities issued years ago.

—Ian Salisbury

Meta Platforms is facing its biggest legal challenge yet in a California federal courtroom, where a coalition of 29 states is alleging harm to young users. According to Meta’s calculations, the states could seek up to $1.4 trillion in damages, nearly as much as Meta’s market value.

• The state attorneys general of California, Kentucky, Colorado, and New Jersey are leading the federal case, examining if Meta violated state consumer protection laws and the federal Children’s Online Privacy Protection Act of 1998 by knowingly making its platforms addictive. Meta’s platforms include Facebook, Instagram, and WhatsApp.

• Megan O’Neill, a deputy attorney general for the California Department of Justice, said during Tuesday’s opening arguments that “Meta hooked children on its platforms,” and designed its social-media platforms “so that children would keep coming back,” The Wall Street Journal reported.

• A Meta spokeswoman called the AGs’ financial demands “vastly disproportionate.” Paul Schmidt, a lawyer for Meta, showed some of the measures he said Meta has taken to prevent children from using its platforms in an unsafe way. 

• Thomas Claps from Gordon Haskett Research Advisors, doesn’t expect the judge to award “anywhere close” to $1.4 trillion, but wrote that Meta still faces the threat of “significant damages” plus possible penalties and forced business changes “if it doesn’t settle this trial.”

What’s Next: Even a settlement far short of the potential damages is unlikely to spell the end of Meta’s legal troubles. As Barron’s has previously written, Meta and other companies that run social-media sites face thousands of lawsuits filed by teenagers, school districts, and state attorneys general.

—Adam Clark and Janet H. Cho

Walt Disney has gone all-in on streaming in recent year—and the House of Mouse’s lawsuit against the Federal Communications Commission is more proof that it needs to focus on growing platforms such as Disney+.

• Disney sued the FCC on Tuesday, alleging the agency has waged a retaliatory campaign against its ABC television network and stations. The FCC on April 28 directed eight ABC stations to apply to renew their broadcasting licenses ahead of schedule. 

• The order came one day after President Donald Trump called for the immediate firing of talk show host Jimmy Kimmel. He has criticized the Trump administration, and in late September Disney even temporarily pulled Kimmel’s show off the air after the host made comments about the shooting of conservative political activist and media personality Charlie Kirk.

• The FCC regulates TV, radio, wire, satellite, and cable—but not streaming content. That means a streaming-focused future could benefit Disney as tensions between the media company and the government heat up.

• Steaming “sits outside the FCC’s broadcast oversight,” said Mike Proulx, director of market research company Forrester Research. “That makes investing in scaled direct-to-consumer businesses even more attractive.”

What’s Next: Disney has already been growing its streaming business as consumers cut the cord. When reporting fiscal third-quarter earnings on Aug. 5, Disney said it plans to roughly triple the number of local original series on Disney+ over the next three years.

—Angela Palumbo and George Glover

The prediction market platform Kalshi is preparing to offer traders the chance to take leveraged long or short positions on the stock indexes, asking regulators at the Commodity Futures Trading Commission for approval to offer perpetual futures tied to equity indexes and, separately, to copper prices.

• Perpetual futures, or “perps,” are a multi-trillion dollar asset class on offshore cryptocurrency exchanges, but they were only approved for trading in the U.S. by the CFTC in May. Traders bet against one another on whether the price of an underlying asset will go up or down.

• If the price goes up, the trader on the short side pays the long side; if it goes down, the long side pays the short side. Perp traders can apply leverage to their positions—as high as 50-to-1 on some offshore exchanges. Kalshi offers up to 6-to-1 on certain assets.

• Single stocks aren’t a focus for now but could become one. Single security options are jointly regulated by the CFTC and Securities Exchange Commission. Polymarket, Kalshi’s closest competitor in the prediction-market space, offers single-stock perps on its international platform. (And has a data partnership with Barron’s publisher Dow Jones)

• Like the name suggests, perpetual futures have no set expiration date and trade around the clock. While the products have up until recently been limited to prices of cryptocurrencies, the expansion to stock indexes heralds a new era of nonstop trading.

What’s Next: Kalshi appears likely to eventually file for approval of single-security perps after signaling an ambition to list prediction markets on whether a stock will go up or down within a 15-minute window. Nasdaq has confirmed it will begin 23-hour-a-day trading on weekdays starting Dec. 6.

—Nick Devor

Goldman Sachs has been casting around for more predictable revenue, to combat the volatility of trading and banking. Its latest deal is for real estate investment company LCN Capital Partners. Co-founded by a former Goldman banker, it’s the company’s fourth asset-management acquisition in less than a year.

• LCN Capital specializes in something called triple-net leases, which are agreements between landlords and corporate tenants. It isn’t something that Goldman has, Marc Nachmann, Goldman’s global head of asset and wealth management, told Barron’s. It’s paying up to $410 million.