华尔街看中国互联网：存在"独特的投资机会"，拥抱AI和游戏，回避电商

Core Viewpoint - Despite a more than 50% increase year-to-date, the Chinese internet sector remains a "must-hold" asset, presenting unique investment opportunities in AI and gaming [1][2]. Group 1: AI and Gaming Opportunities - Chinese internet giants are in a "best position" for AI applications and commercialization, benefiting from a closed-loop ecosystem, proven commercialization expertise, vast user data, and lower token costs [2][6]. - Tencent is highlighted as the top pick in the sector, combining AI-driven growth, a stable competitive landscape, strong shareholder returns, and attractive valuation [2]. - Alibaba is favored in the AI and cloud business due to its leading market share and comprehensive AI/cloud products, with accelerating cloud revenue expected to support market sentiment [5][6]. Group 2: E-commerce Challenges - The report expresses a cautious stance on trading platforms (e-commerce and local services), describing competition in the "instant retail" sector as a "protracted battle" expected to last until 2026, which will lower industry profit margins [8][10]. - E-commerce sector's total operating profit growth has sharply declined from a 2% year-on-year increase in Q1 2025 to a 23% year-on-year decrease in Q2 2025, with most trading platforms seeing downward revisions in their 12-month rolling EPS forecasts [10]. - Meituan's rating has been downgraded from "buy" to "neutral" due to low visibility on 2026 earnings and high uncertainty [10]. Group 3: Valuation Insights - Despite challenges, the overall valuation discount of the Chinese internet sector remains significant [13]. - Historically, the Nasdaq Golden Dragon China Index traded at similar valuations to the Nasdaq 100 Index before early 2023, with the current valuation premium over the MSCI China Index at only 20%, compared to 40-80% over the past decade [16]. - This deep discount provides unique entry opportunities for long-term investors, particularly in high-certainty growth areas like AI applications and gaming [18].