China Internet: Is bad news now... good news?

研报英文原文证据摘录

China Internet: Is bad news now... good news?

20 July 2026

China Internet

A bounce… or something more? In this note we outline some latest thoughts on the Robin Zhu

+852 2123 2659 China Internet sector, taking stock of the latest developments and data points across the

robin.zhu@bernsteinsg.com industry, recent discussions with the large caps we cover, and investor feedback we’d heard

in a few dozen meetings with investors on the road in North America.

Charles Gou

+852 2123 2618 If it can’t get worse… We started 2026 with a cautious top-down view. Some concerns on charles.gou@bernsteinsg.com

macro and regulation persist, though compared with December, investor perceptions and

sector valuations have caught down in recent months. Some of the narratives we’d heard on Min-Joo Kang

+852 2123 2644 AI costs (e.g. unconstrained inference costs even while agentic AI engagement remains low)

minjoo.kang@bernsteinsg.com had become misinformed and overly negative. At the risk of sounding wishful (consumption

remains anemic, but non-growth in Q2 was at least partly influenced by high 6.18 comps),

Hyrum Caesar we do wonder if the NBS’ willingness to report below-target GDP growth might precede a +81 3 6777 6979

hyrum.caesar@bernsteinsg.com period of less repressive macro policy.

Is AI capex good again? The combination of Tencent’s Hy3 release and Alicloud growth

remaining on track (plus e-commerce profits proving better than feared) likely catalysed

the recent bounce in sector sentiment. For Tencent, Xiaowei feedback and the timing of

the next Hy4 pre-train represent the next data points to watch. Alibaba moving T-head into

its Cloud segment felt a little cute, but should contribute to revenue growth. Chip sales