Citi published a research report on the mainland internet industry, stating that weak consumer sentiment has affected the growth of the total transaction value (GMV) of e-commerce platforms by the end of Q4 2025, and the macro environment may continue to be weak in 2026. Additionally, regulatory tightening and e-commerce value-added tax have impacted the profitability of small and medium-sized merchants, putting pressure on the monetization capabilities and profit margins of e-commerce platforms.
At the same time, demand for AI cloud services remains strong, and as domestic chip supply gradually catches up and some high-end foreign chips are approved, supply constraints are expected to ease gradually. The report also mentioned that the competitive landscape in the fields of food delivery, instant retail, and AI chatbots remains intense, with companies investing in promotional expenses to capture market share and enhance new user penetration and adoption rates, which may further pressure profitability and profit margins. Meanwhile, overseas markets are becoming a new focus for Robotaxi, AI applications, and internet data center construction.
In the industry, the bank's top picks are Tencent (00700.HK), Alibaba (BABA.US), Trip.com (TCOM.US), NetEase (NTES.US), and Century Huatong (002602.SZ)