Zhi Tong Cai Jing·2025-12-31 00:55Core Viewpoint - The internet sector is expected to experience a volatile upward trend in 2025, driven by AI-induced value reassessment and liquidity improvement [1][2] Group 1: Market Performance and Trends - The Hang Seng Tech Index is projected to rise by 19% in 2024 and 23% in 2025, with EPS expected to grow by 27% in 2024 and decline by 10% in 2025 [2] - By December 24, 2025, the Hang Seng Tech Index's NTM PE is forecasted to be 19.3x, which is at the 42.4% percentile of the past five years [2] - Notable individual stocks such as Pop Mart, Alibaba, and NetEase have significantly outperformed the index, with respective gains of 126%, 81%, and 63% [2] Group 2: AI Development and Applications - The development of AI is accelerating, with domestic models catching up in capabilities, focusing on full-modal, long-context, and agentic abilities [3] - The daily token consumption for major models has surged from 0.12 trillion in May 2024 to 50 trillion by December 2025 [3] - AI applications are expected to enhance traditional businesses, with significant improvements in recommendation accuracy and production efficiency anticipated in 2026 [5] Group 3: Infrastructure and Capital Expenditure - Capital expenditures (CAPEX) for Alibaba and Tencent are projected to reach 130 billion and 82.9 billion respectively in 2025, representing 12.7% and 11.0% of their revenues [4] - The expansion of CAPEX is driven by alleviated constraints on overseas computing power and enhanced domestic capabilities [4] - Alibaba is expected to invest over 120 billion in AI infrastructure and product development from FY25Q3 to FY26Q2 [4] Group 4: Stock Selection Criteria - For companies with lower AI correlation, earnings visibility and valuation attractiveness will be key factors influencing stock prices [6] - Stable competitive landscapes and resilient performance in niche markets are expected to support leading companies [6] - The focus on supply-driven innovation in consumer sentiment is anticipated to maintain high market activity [6]