PDD(US:PDD) Guoxin Securities·2025-06-06 00:50Investment Rating - The report maintains an "Outperform" rating for the internet industry [1][4][5] Core Insights - The internet industry showed stable performance in Q1, with the Hang Seng Tech Index experiencing fluctuations. The index rose by 1.63% in May, while the Nasdaq Internet Index increased by 8.52% during the same period [1][3][11] - The report highlights that major companies in the AI sector are benefiting from their business scenarios, such as cloud computing and advertising, although short-term AI agent developments still require refinement [3][4] - The report recommends defensive stocks with stable performance and low valuations, specifically Tencent Music and NetEase [3][4] Market Review - The Hang Seng Tech Index's PE-TTM was recorded at 20.43x as of June 4, 2025, which is at the 9.49% percentile since the index's inception [1][19] - In May, notable stock performances included Meitu, NetEase Cloud Music, and NetEase in Hong Kong, with respective monthly gains of 21%, 17%, and 15% [1][15] - In the U.S. market, Tencent Music, Nvidia, and SEA were the top performers, with monthly increases of 26%, 24%, and 20% [1][15] AI Developments - OpenAI launched the Codex programming agent and upgraded the GPT-4o voice model [2][21] - Google introduced multiple AI advancements at the Google I/O 2025 developer conference, including the Gemini 2.5 Pro model [2][22] - Amazon released the Amazon Nova Premier model, designed for complex task processing [2][26] - Tencent upgraded its Hunyuan Image 2.0 model, enhancing its capabilities significantly [2][35] Industry Dynamics - The number of game approvals in May reached a two-year high, with 144 game licenses issued [2][47] - Payment institutions' reserve funds increased by 6% year-on-year in April [2][48] - E-commerce dynamics include the establishment of a new e-commerce product department by WeChat and significant growth in daily order volumes for JD's delivery services [2][49][54]