2026-01-22 02:44Summary of Key Points from the Conference Call Industry Overview - The focus is on the China Internet sector, particularly regarding AI applications and advertising technology (adtech) as key themes for 2026 [1][2]. Core Themes for 2026 1. AI/Adtech Evolution: - Shift towards ROI-based advertising and new marketing strategies like Answer & Generative Engine Optimization (AEO/GEO) [1][19]. 2. AI Model Breakthroughs: - Focus on long-context, multi-modal models, and cost-efficient architectures [1][22]. 3. Proliferation of To-C Assistants: - Emergence of AI super entry-points, impacting traditional search markets and app user traffic [1][23]. 4. Chip Supply Dynamics: - Access to next-generation chips will determine the competitive gap between Chinese and US AI models [1][24]. 5. Global Market Inroads: - Increased monetization through a mix of open and closed-source models, with a focus on subscription and API revenue streams [1][26]. 6. AI Inference Demand: - Continued growth in AI inference demand will drive cloud revenue and data center demand [1][27]. Company Insights - Alibaba and Tencent are identified as the best-positioned mega-cap stocks in the China internet sector for the long term [2]. - PDD is highlighted as a Buy idea due to its valuation discount and strong user engagement [2]. Engagement Metrics - Overall time spent on the top 400 mobile apps increased by 7% YoY in December 2025, with notable growth in Douyin (+19% YoY) and eCommerce engagement (+10% YoY) [3][8]. - Weixin and Weibo both saw a 5% YoY increase in time spent [8]. Sector Performance - Cloud & Data Centers ranked as the top sub-sector, followed by Games & Entertainment and AI Models [2][14]. - JD and Taobao showed strong growth in eCommerce time spent, with increases of 38% and 9% YoY, respectively [8]. Notable Trends - AI Engagement: Domestic AIGC application engagement rose by 16% MoM, driven by apps like Doubao and Qwen [8]. - Recruitment Platforms: Boss Zhipin maintained leadership in time spent share at 64% in December [12]. - Real Estate: Beike Zhaofang saw a 9% YoY increase in MAUs [12]. Challenges and Regulatory Environment - Cross-border eCommerce faces increasing regulatory pressure, with the EU imposing a €3 customs duty on low-value parcels starting July 2026 [8]. Conclusion - The China Internet sector is poised for significant transformation driven by AI advancements, with key players like Alibaba and Tencent leading the charge. The focus on ROI-based advertising, AI model breakthroughs, and global market expansion will shape the competitive landscape in the coming years.