Goldman Sachs: This year is a key year for AI investment, optimistic about Alibaba, Tencent, and Pinduoduo

Goldman Sachs published a research report emphasizing that 2026 will be a key year for accelerating AI investment and for Chinese internet giants to defend their core positions. Investors' focus and concerns are mainly centered on the fierce competition among consumer AI super applications. The firm believes that agency-type or seamless transaction capabilities, as well as social/push functions, will be crucial for user retention and application expansion. The growth potential of AI capital expenditure among China's super-large enterprises will be vital for long-term success, as their complete AI stack capabilities will be essential during the period from 2026 to 2027. However, recent regulatory policies have raised market concerns about the similarities to the regulatory cycle of 2020 to 2021, leading to a weakening of industry stock prices.

The firm’s top three favored sub-industries include cloud and data centers, gaming and entertainment, and AI models. In the long term (1 to 3 years), the firm believes that Alibaba (09988.HK) and Tencent (00700.HK) are the most competitive stocks among Chinese internet giants. However, the firm also sees some medium and large companies with the potential to surpass the giants in 2026. Among the giants, the firm particularly highlights Pinduoduo (PDD.US), whose valuation discount, strong cost-performance user mindset, and the growth of Temu make it a key investment target