Orient Securities·2025-05-22 11:50Investment Rating - The report maintains a "Buy" rating for key companies in the AI sector, including Alibaba-W, Kuaishou-W, Tencent Holdings, and Baidu Group-SW [3][8][11]. Core Insights - The AI sector is experiencing a new cycle driven by advancements in computing power, algorithms, and applications, with a strong recommendation to increase exposure to the Hong Kong internet sector [3][8]. - Alibaba and Tencent continue to maintain high capital expenditure, with Alibaba's Q1 2025 capital expenditure reaching 24.61 billion CNY, a year-on-year increase of 120.7%, and Tencent's at 27.48 billion CNY, a year-on-year increase of 91.4% [11][12]. - The report highlights the ongoing momentum in AI investments both domestically and internationally, with major cloud service providers in the U.S. also showing significant capital expenditure growth [17][19]. Summary by Sections AI Large Models - Alibaba launched the Wan2.1-VACE model, capable of generating videos from text and images, with over 330,000 downloads since its release [20][31]. - Tencent introduced the Image2.0 model, achieving image generation speeds in milliseconds, significantly enhancing user experience [23][24]. - ByteDance's upgraded Seed1.5 model demonstrated superior multi-modal reasoning capabilities, achieving state-of-the-art performance in 38 out of 60 benchmarks [27][29]. Algorithm Technology - DeepSeek's V3 model employs innovative techniques to reduce training costs and memory usage, achieving a 90% reduction in computational costs compared to dense models [32][34]. - Microsoft announced collaborations to enhance AI interoperability through the A2A protocol, aiming to streamline AI agent collaboration across platforms [35]. AI Applications - Baidu launched the DeepSearch feature, which utilizes a vast content library to provide intelligent search capabilities, enhancing user interaction and efficiency [36][43]. - ByteDance's DBCopilot tool optimizes database management through natural language processing, significantly improving operational efficiency [43]. Market Trends - The report notes a decline in web traffic for AI applications, with DeepSeek experiencing a 12.8% decrease in visits, while ChatGPT remains the most visited AI application globally [44][46].