BABA(US:BABA) Hua Er Jie Jian Wen·2026-01-09 08:41Core Insights - Morgan Stanley believes that the market is undergoing a structural transformation, with China adopting a unique "open" model strategy to counter the world's "closed" systems in the global AI race [1] - The report indicates that China has captured a significant share of the top SOTA models, with expectations that the total addressable market (TAM) for cloud AI in China will reach $50 billion by 2027 [1] - Investors should focus on the monetization capabilities and ecological barriers at the application layer rather than just the infrastructure arms race [1] Market Dynamics - China holds a comparative advantage in data volume, power supply, and engineering talent, which supports the growth of AI applications [1] - The dual-track evolution of "super apps" and "AI-native applications" is evident in the Chinese market, with WeChat emerging as a leading AI agent with 1.1 billion monthly active users and high user engagement [2][5] Application Landscape - AI-native applications from companies like ByteDance, Baidu, and Alibaba are rapidly evolving from simple chatbots to more complex emotional interactions and content creation tools [5] - The penetration of AI in enterprise sectors is reshaping industry dynamics, with strong deployment intentions for generative AI across various verticals such as advertising, healthcare, and finance [11] Competitive Positioning - Alibaba is positioned as the "best AI enabler" in China, leveraging its cloud infrastructure and integration with e-commerce and other business scenarios [14] - Tencent is recognized for its high consumer monetization potential through its WeChat ecosystem, which provides a natural barrier in content ecology [14] - ByteDance is defined as a "full-stack AI leader," with a comprehensive layout from underlying engines to various AI-native applications [14] Investment Focus - Investors are encouraged to monitor the speed at which these tech giants implement AI in their respective domains, particularly those that can translate AI technology into actual revenue and profits [15]