INTERNET & MEDIA : China Internet: Marketing feedback

Research evidence excerpt

INTERNET & MEDIA : China Internet: Marketing feedback

e order of priority are: 1) The comparison of Alibaba’s in-house AI-chip products vs Baidu’s and other

mainstream third-party vendors’; 2) How sustainable the existing growth drivers (such as agentic usage, adoption of

OpenClaw architecture) are; 3) AI cloud margin profile; 4) The potential spin-off timeline of T-Head, Alibaba’s in-house

chipmaking unit.

Tencent: Investors calling for a clearer AI roadmap. While most investors agree with Tencent’s position as a long-

term winner in the China Internet and consumer AI space, there was pushback on two aspects which we expect to

continue to be a drag on the group’s valuation multiple: 1) There’s limited visibility into Tencent’s AI investment plans

(how much into compute, how will it secure AI compute supply) and returns (detailed AI product integration timeline and

monetisation plan), with particular concern on pressure from Bytedance’s momentum (chatbot engagement, foundation

model progress, Soda music progress, etc.). 2) Growth headwinds in domestic online gaming after strong momentum

over the last two years may cause further downgrades to current consensus EPS forecasts.

Meituan: Bulls are trying to look into 2028. Most remain cautious on Meituan but we thought investors were yet to

fully comprehend the implications of a potential increase in competition from Bytedance in in-store this year. On food

delivery (FD), we found most do not have conviction that the unit profitability will largely improve by the end of this year

despite moderation of subsides at the industry level YTD. Investors with the most constructive view on Meituan believe

2028 or even 2029 may see the stabilisation of Meituan’s operating profits but they found it hard to form a view on