"We favor AI-driven and alpha growth names with strong execution,"
"We believe that the sector ... has not fully priced in growth prospects yet."
"China's internet leaders are accelerating AI monetization, backed by domestic chip development and LLM innovation,"
"In the past quarter, we observed that China internet companies have reaped tangible AI benefits. This is evident in both actual numbers and positive management outlooks, especially in the advertising and gaming sectors,"
UBS narrowed Chinese AI investment focus to Alibaba and Tencent following positive second-quarter results and observable AI monetization across internet firms. Alibaba is positioned as the largest AI enabler with full-stack AI cloud infrastructure, contributing to substantial U.S. share gains. Tencent stands to benefit from AI enhancements in gaming and advertising and potential upside from AI agents, driving strong Hong Kong performance. Baidu, JD.com, and Meituan lag in returns. Domestic chip development and large language model innovation are underpinning accelerated AI monetization, and sector growth prospects appear not fully reflected in current valuations.
Read at www.cnbc.com
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