CITIC Securities International: The top picks for Chinese internet are Tencent, Alibaba, and Bilibili

CITIC Securities International released a report predicting that the integration of AI models will accelerate by 2026. The United States leads in powerful intelligent agents and multimodal models, such as GPT-5 and Gemini 3, but China is rapidly closing the gap with efficient open-source models, bringing fierce competition to the global market. Cloud capital expenditures remain high to meet the surge in inference demand. AI intelligent agents will trigger a battle for traffic entry in 2026.

For the Chinese internet, the firm indicated that AI advertising and gaming will drive growth for Tencent (00700.HK), while rationalization of local life competition is beneficial for Alibaba (09988.HK)(BABA.US). AI upgrades and cost efficiency advantages will accelerate overseas expansion (cloud, e-commerce, content). Revenue growth is expected to exceed 10% and profit growth to exceed 16% in the fiscal year 2026.

The firm reiterated its view that large technology companies are best positioned for AI monetization. In the Chinese internet sector, the ranking is as follows: advertising > cloud > gaming > value-added services > e-commerce = local services > live streaming. The firm remains optimistic about the internet industry, preferring companies with the following characteristics: robust profit growth; competitive moats; good risk-return profiles; and substantial shareholder returns. Preferred targets include Tencent, Alibaba, and Bilibili (09626.HK).

In the U.S. stock market, CITIC Securities reiterated its preference for large technology companies, believing they are best positioned to respond to AI, able to subsidize AI investments with strong core businesses while implementing monetization strategies. The ranking for U.S. targets is as follows: Alphabet (GOOG.US) > Meta (META.US) > Amazon (AMZN.US) > Microsoft (MSFT.US)