CMSC: Chinese AI Internet industry valuation still attractive, preferred Alibaba (09988), KNOWLEDGE ATLAS (02513), Kuaishou (01024) and others.

CMSC released a research report, maintaining a recommended rating for the AI Internet industry, with Alibaba (09988) (BABA. US), KNOWLEDGE ATLAS (02513), KUAISHOU-W (01024), and JOYY (JOYY. US) as top picks. The firm also suggested paying attention to undervalued companies such as Tencent (00700) and MiniMax (00100), believing that both have higher potential for valuation recovery. The commercialization of artificial intelligence is accelerating, and the valuation of China's AI Internet industry remains attractive. The firm pointed out that, after an expected reset, the Hang Seng Tech Index's performance has been lower in the second quarter compared to the first quarter of this year. Although the valuation of the Chinese internet sector is still historically low, the first quarter of this year showed strong profit resilience. The firm stated that AI is still the core investment theme in the Chinese internet industry and is continuing to rapidly develop. On the business side, B-end commercialization is accelerating, gradually permeating white-collar workflows; C-end commercialization is still in its early stages, with WeChat Agent expected to become a significant catalyst in the second half of the year. Model iteration and progress in domestic chip development are key changes.