The analyst rating from CLSA is based on several key factors:
1. Strong Performance in 2025: The Chinese internet sector, particularly led by DeepSeek in AI trends, showed robust growth, which is expected to continue into 2026.
2. Intensified Competition: There is anticipated increased competition in agentic and video generation applications, particularly between China and the US in various AI-related fields.
3. Expansion in Overseas Markets: Despite geopolitical challenges, the Chinese gaming and e-commerce sectors are expanding rapidly in international markets.
4. Cautious Outlook on Domestic E-commerce: While there is optimism in certain sectors, CLSA maintains a cautious stance on the domestic e-commerce sector.
5. Investment Strategy Favoring AI, Gaming, and Health: CLSA recommends focusing on AI, gaming, and health-related sectors, forecasting significant revenue and EBIT growth.
6. Leadership in AI Application Implementation: CLSA believes that China is well-positioned to lead globally in the implementation of AI applications.
These factors collectively inform CLSA's positive outlook on specific stocks, including TENCENT, XIAOMI, and BABA, highlighting their strengths in AI applications and cloud services.
