Goldman Sachs: Competition in China's consumer-level AI intensifies, Alibaba and Tencent expected to be the best-positioned internet giants.

Goldman Sachs stated that the competition in the consumer-grade AI field in China will further intensify before the Spring Festival of 2026. It is expected that the ultimate entry point for AI will still be concentrated on three major internet platforms, including Tencent, Alibaba, and ByteDance. Analysts such as Ronald Keung stated in their report that they continue to favor Alibaba and Tencent as the best layout for internet giants in the one to three-year dimension, but also believe that some companies may outperform the giants in 2026. It is expected that regulatory policies will present a combination of growth promotion and anti-inner circles, which is positive for the industry's competitive landscape. The existing value-added tax laws have not shown that tax rate increases targeting telecom operators will also apply to internet companies. The success of Tencent's social AI super application strategy depends on the speed of the reintegration of Yuanbao and its AI assistant function in WeChat, which may replicate the experience of Weishi and the successful model of Video Number. It is expected that Alibaba's differentiation advantage lies in the integration of e-commerce with local services, as well as the strong capability and deep research function of the Qianwen model. For ByteDance, they will continue to focus on the strategic progress of Douyin and TikTok, especially in their related measures before and during their sponsorship of the CCTV Spring Festival Gala. It is expected that this year will be a year dominated by alpha, driven by profit growth, with the top three segments being cloud and data centers, gaming and entertainment, and AI models.