<div id="readability-page-1"><div>G Sachs published a research report previewing the upcoming 1Q results of major China internet stocks (TENCENT (00700.HK) -6.600 (-1.400%) Short selling $1.16B; Ratio 9.780% and BABA-W (09988.HK) -4.400 (-3.165%) Short selling $2.09B; Ratio 25.406% will announce on Wednesday), expecting mixed performance. The broker forecasts several key themes: (1) steady revenue growth, with cloud revenue growth serving as a highlight; (2) potentially higher artificial intelligence capital expenditure driven by the proliferation of agentic AI-powered tokens; (3) significant GAAP/IFRS non-cash investment gains arising from mark-to-market changes in share prices of companies invested in AI models; and (4) margin pressure on core profitability as internet giants pivot toward AI, partly offset by potentially faster improvement in unit economics of quick commerce and food delivery businesses.Looking ahead to 2Q and 2H, the broker expects earnings growth of trading platforms to re-accelerate, coupled with positive read-across from US hyperscalers, creating a more supportive environment. G Sachs maintains its sub-sector preferences, naming &#34;cloud computing and data centers&#34; as its top pick (including BABA-W (09988.HK) -4.400 (-3.165%) Short selling $2.09B; Ratio 25.406% , GDS Holdings Limited (GDS.US) , VNET Group, Inc. (VNET.US) and Kingsoft Cloud Holdings Limited (KC.US) ); followed by &#34;e-commerce and mobility,&#34; and &#34;gaming and entertainment&#34; as the third preference. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-08 16:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)</div></div>

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G Sachs anticipates mixed 1Q results for major China internet stocks, including TENCENT and BABA-W, with key themes of steady revenue growth, increased AI capital expenditure, and margin pressure on profitability. The firm expects earnings growth to re-accelerate in 2Q and 2H, influenced by US hyperscalers. G Sachs maintains its top pick in "cloud computing and data centers," followed by "e-commerce and mobility," and "gaming and entertainment."

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G Sachs Expects Mixed 1Q Results for Major China Internet Stocks; Maintains Cloud Computing & Data Centers as Top Pick