Investment Rating - The report maintains a cautious outlook on the China Internet sector due to trade disputes and delisting risks, while highlighting potential opportunities in domestic consumption-focused companies [1][2]. Core Insights - The ongoing tariff dispute has limited direct operational impacts on most China internet companies, but it poses risks of a global economic slowdown and investment outflows [1]. - Major internet companies are increasing investments to support government initiatives aimed at converting export supply into domestic consumption, which may lead to excess supply and margin pressures if revenue growth slows [1][3]. - Delisting risks for American Depositary Receipts (ADRs) have escalated, prompting companies like PDD and YMM to consider dual listings in Hong Kong [1][4]. Summary by Sections Investment Opportunities - Key picks include Tencent and Alibaba as core AI plays, along with JD.com, YMM, and Meituan for domestic consumption exposure, and NetEase and TME for defensive revenue streams [2]. Government Initiatives - The Chinese government is actively promoting policies to boost domestic consumption, with several internet companies committing to support these initiatives [3][8]. - JD.com has launched a RMB 200 billion scheme to assist cross-border merchants in tapping into the domestic market [9][10]. Delisting Risks - The risk of ADR delisting has increased following comments from US Treasury officials, leading to expectations that companies without Hong Kong listings will seek dual listings [4][20]. - Companies with higher US investor ownership may face greater selling pressure if investment restrictions are imposed [26]. Earnings Outlook - The first quarter of 2025 is expected to be largely on track for major companies, with management's guidance for the second quarter and full year being closely monitored [5][29]. AI Technology Advancement - Despite tariff challenges, Chinese internet companies continue to advance their AI technologies, with significant investments planned for the coming years [6][32]. - Major players like Alibaba and Tencent are ramping up their AI capabilities, with substantial capital expenditures projected [37][38]. Market Performance - China's GDP grew by 5.4% year-on-year in the first quarter of 2025, exceeding expectations, while online retail sales showed a growth of 7.9% year-on-year [47][48].