--- title: "\"Large Banks\" Research: The valuation of Chinese internet stocks is not yet too high, with Tencent and Alibaba benefiting the most from AI growth" description: "HSBC's research report points out that the valuations of Chinese internet stocks are not yet excessive, especially Tencent and Alibaba, which stand to benefit the most from AI growth. The report shows" type: "news" locale: "en" url: "https://longbridge.com/en/news/262338667.md" published_at: "2025-10-23T02:54:53.000Z" --- # "Large Banks" Research: The valuation of Chinese internet stocks is not yet too high, with Tencent and Alibaba benefiting the most from AI growth > HSBC's research report points out that the valuations of Chinese internet stocks are not yet excessive, especially Tencent and Alibaba, which stand to benefit the most from AI growth. The report shows that the China Concept Internet Index ETF has risen 38% year-to-date, with large-cap stocks trading at a price-to-earnings ratio of 16 times, below the 10-year average of 20 times. Tencent and NetEase have performed well in the gaming sector, while Kuaishou's stock price has been undervalued after a pullback. Pinduoduo is trading at a price-to-earnings ratio of 10 times, indicating value HSBC Research published a report, expecting that the AI and gaming sectors will continue to lead, but as valuations rise, more factors such as earnings resilience will be considered. It believes that large-cap stocks have better risk-return profiles, favoring Tencent (00700.HK), Alibaba-W (09988.HK), NetEase (NTES.US), Kuaishou-W (01024.HK), and Pinduoduo (PDD.US), all rated as "Buy." The report indicates that the Chinese internet industry has performed well this year, with the China Concept Internet Index ETF (KWEB.US) up 38% year-to-date. The one-year forward price-to-earnings ratio has expanded from 14 times to 21 times, and the valuation discount compared to large-cap U.S. internet stocks has narrowed. Nevertheless, large-cap Chinese internet stocks are trading at only 16 times earnings, compared to a 10-year average of 20 times, indicating that valuations are not yet excessive. In terms of earnings resilience and certainty, the bank believes Tencent and Alibaba are best positioned to benefit from AI-related growth. Tencent's earnings in 2026 are more likely to have upside potential due to the recovery of profit shares from its associates and joint ventures. In the gaming sector, Tencent and NetEase are the bank's top picks. Revenue growth from the recovery of traditional gaming may drive market-underestimated profit surprises. At the same time, after a recent pullback in Kuaishou's stock price, the bank believes the market has not fully reflected the potential upside of Kuaishou AI. Although the growth prospects for e-commerce companies may be pressured by competition in 2026, the risk-return profile is more favorable after poor stock performance. The bank believes that Pinduoduo, trading at a projected 2026 price-to-earnings ratio of 10 times, is already showing value ### Related Stocks - [TCTZF.US - Tencent Holdings Limited](https://longbridge.com/en/quote/TCTZF.US.md) - [TCEHY.US - Tencent](https://longbridge.com/en/quote/TCEHY.US.md) - [00700.HK - TENCENT](https://longbridge.com/en/quote/00700.HK.md) - [BABA.US - Alibaba](https://longbridge.com/en/quote/BABA.US.md) - [09988.HK - BABA-W](https://longbridge.com/en/quote/09988.HK.md) - [KBAB.US - KraneShares 2x Long BABA Daily ETF](https://longbridge.com/en/quote/KBAB.US.md) - [BABO.US - YieldMax BABA Option Income Strategy ETF](https://longbridge.com/en/quote/BABO.US.md) - [BABX.US - BABA 2x Long Daily ETF - GraniteShares](https://longbridge.com/en/quote/BABX.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | Alibaba unveils new Qwen3.5 model for 'agentic AI era' | Alibaba has launched its new AI model, Qwen 3.5, which is designed for independent task execution and boasts significant | [Link](https://longbridge.com/en/news/276045126.md) | | AI Analyst Downgrades Alibaba Stock (BABA) Ahead of Q3 Earnings | TipRanks' AI Analyst has downgraded Alibaba (BABA) stock to Neutral from Buy ahead of its Q3 FY26 earnings report on Feb | [Link](https://longbridge.com/en/news/276010798.md) | | Infosys Unveils AI First Value Framework | Infosys Ltd :INFOSYS - INFOSYS UNVEILS AI FIRST VALUE FRAMEWORK | [Link](https://longbridge.com/en/news/276131501.md) | | Shield AI Looking to Raise Up to $1 Billion in New Funding Round | Shield AI Looking to Raise Up to $1 Billion in New Funding Round | [Link](https://longbridge.com/en/news/275921852.md) | | Should You Bet on a Short Squeeze in SoundHound AI Stock Now? | Should You Bet on a Short Squeeze in SoundHound AI Stock Now? | [Link](https://longbridge.com/en/news/275918992.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.