G Sachs published a report re-evaluating five key investor debate topics shaping the landscape of China AI models: 1) competitive dynamics between US and China AI models; 2) intensifying price competition among China model providers; 3) exponential Token growth drivers and whether enterprise or consumer-side agents can justify surging Token bills as global consumption scales toward quadrillion-level Tokens; 4) capital expenditure/free cash flow outlook of hyperscalers; and 5) the form factors of Agentic AI and interference among agents.

The broker forecasts that by the end of this year, China daily Token usage will reach 350 trillion (equivalent to 10.5 quadrillion Tokens per month by December 2026). The cloud and data center subsector remains its most favored area for 2H26 (key recommendations remain: Alibaba Group Holding Limited (09988.HK) -0.800 (-0.673%) Short selling $595.42M; Ratio 16.631% (BABA.US) (included in its Asia Pacific Conviction List Buy), GDS Holdings Limited (09698.HK) +1.680 (+5.185%) Short selling $52.57M; Ratio 47.506% , VNET Group, Inc. (VNET.US) and Kingsoft Cloud Holdings Limited (03896.HK) -0.060 (-1.014%) Short selling $18.54M; Ratio 9.101% (KC.US) ). Despite slower-than-expected existing capacity expansion and ramp-up in 1Q, the broker expects cloud service price hikes and continued Token expansion to drive cloud revenue growth and margin expansion, alongside higher capital expenditure by hyperscalers. It now estimates that ByteDance, Baidu, Alibaba and TENCENT (00700.HK) +14.600 (+3.271%) Short selling $2.01B; Ratio 18.708% (BBAT) will record total capital expenditure of USD100 billion for full-year 2026, with a higher weighting in 2H, supporting accelerated QoQ growth for data centers in 2H.

Meanwhile, weaker macroeconomic and consumption trends quarter-to-date have led the broker to raise the investment priority of gaming and entertainment to second place (NTES-S (09999.HK) -1.900 (-1.012%) Short selling $124.98M; Ratio 28.909% (NTES.US) is a new recommendation, alongside TENCENT (00700.HK) +14.600 (+3.271%) Short selling $2.01B; Ratio 18.708% ), while downgrading e-commerce and mobility to third place (but it reiterates JD-SW (09618.HK) -0.400 (-0.352%) Short selling $152.02M; Ratio 31.996% (JD.US) as a key recommendation for 2H26, as it believes 2Q will mark its toughest YoY comparison quarter, with revenue and profit expected to resume YoY recovery in 2H). Among AI model companies (ranked fourth), it highlighted MINIMAX-W (00100.HK) -33.000 (-6.496%) Short selling $78.14M; Ratio 14.554% , citing upside potential in annual recurring revenue and an attractive risk-reward skew.

The broker believes Alibaba Group Holding Limited has bottomed its EPS downgrade cycle (with an inflection in EPS expected in 2H26), while TENCENT (00700.HK) +14.600 (+3.271%) Short selling $2.01B; Ratio 18.708% has bottomed in valuation multiples (at 12x, already the lowest level among China and global peers during cyclical downturns). These are potential signs of share price support, with an inflection anticipated in 2H26. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-06-09 12:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)