伯恩斯坦-中国互联网：第二重要的事-China Internet：The second most important thing-20260416

16April2026

ChinaInternet

ChinaInternet:Thesecondmostimportantthing

RobinZhu

+85221232659

robin.zhu@

CharlesGou

+85221232618

charles.gou@

Min-JooKang

+85221232644

minjoo.kang@

Aturninthetape?TheChinaInternetsectorhasenduredadifficultstartto2026,with

KWEBdown14%yeartodate.Thenear-termandlong-termimpactsofAIonourcoveragecompaniesremainstopofmindininvestordiscussions.Butwethinkameaningfulturn

maynowbeathandforthesecondimportantdriverofinvestorsentimentandconsensus

estimates.WethinkAlibaba,JD,andMeituanspentsomethinglikeRMB120bncombinedonquickcommercesinceQ2…moderationshouldhelpsharepriceperformancefromhere.

Alibabahasadecisiontomake-AIistheobviousanswer.KeytoourmorepositiveviewhasbeenAlibaba’ssignallingofahalvingofquickcommercelossesinFY3/27E

versusFY3/26.OursenseisAlibabacontinuestofavourover-ratherthanunder-

investmentinAI.ButthedeclineofLTMFCFtozerohaslikelyenforcedsometough

decisionsatthecompany.AIcapexhasconvertedtoincrementalAlicloudrevenueatarough3-to-1ratio,andRMB40bnredirectedawayfromquickcommerceinfavourofAIcapexwouldtheoreticallyhelptodrivec.7-8%ofAlicloudrevenueacceleration,allelseequal.AllOtherlossesremainanimportantconstraintonAlibaba’sgroupprofits-andvaluationsanchoredongroupPElevels.ButongoingpriceincreasesshouldcontinuetohelpAlicoudeconomics.BettercapitalallocationmayalsomeanthemarketgivesmorecredencetoSOTPvaluations.

JD’srenewedfocusonprofitsshouldleavemoreroomtorun.JD’sprofitscontinue

tolooksolidinspiteofongoingtop-lineheadwindslappinghighelectronicscomps.Q1

profitslookaheadofstreetexpectations.Meanwhile,thecompanysignallingarenewed

focusonprofitabilitymaybemoreimportant.Assuming$1bnofbuybacksthis(e.g.half

theremainingauthorisation)impliesc.6%totalcapitalreturnyieldatcurrentprices.EasiercompskeephopesforH2re-accelerationalive.Meanwhile,suggestionsthat2027Eprofitsmayexceed2024levelspotentiallyleavethestockonsub-7xnextyearPE.

Videogaming:arewedonewithAIdisruptionfears?ProjectGeniecontinuestofeatureoccasionallyinourdiscussionswithinvestors,butoursenseisglobalgamingsentiment

hasshownsignsofstabilisation.Newgameapprovalsremainswelllubricateddomestically,whileGoogle’sloweringofplatformfeesbenefitsmobiledevelopers.Withexpectations

resetfor2026growth,thefocusonTencentlikelycontinuestorevolvearoundthetimingofitsownMuseSparkmoment.NetEasegrowthshouldaccelerateinacouplequartersasdeferredrevenuerecognitionnormalises…andwehopefullygetanAnantadate.

ThebroaderAIquestion.Afterthepost-Q4washout,recentmovesacrossUSpeers

mayportendaperiodofbetterAIsentimentacrossoursectorcoverage.Reportingfrom

Z.ai

andMinimaxpointtoverticalincreasesinenterpriseAIARR…butthelatesthigh-

frequencydatawetrackcontinuestoargueagainstthepaceoftop-funnelchangeamongconsumers(withthetopAIchatbotsstilllookinglikesearchengineplus).WeexpectfrontierintelligencetoremainthearbiterofperformanceacrossthelistedAIlabs,thoughthe

directionofP/ARRmultipleswillbeinterestingtowatchfromcurrentstratosphericlevels-ifbetterclarityacrossthelargecapsdiminishesthe“onlygameintown”argument.

SeetheDisclosureAppendixofthisreportforrequireddisclosures,analystcertificationsandotherimportantinformation.Alternatively,visitour

GlobalResearchDisclosureWebsite

.

FirstPublished:15Apr202620:30UTCCompletionDate:15Apr202615:36UTC

RobinZhu+85221232659

robin.zhu@

16April2026

BERNSTEINTICKERTABLE

15Apr2026

TTM

AdjustedEPSAdjustedP/E(x)

Ticker

Rating

Cur

Closing Price

Price

Target

Rel.

Perf.

Cur2025A2026E2027E

2025A2026E2027E

700.HK(Tencent)

O

HKD

499.00

780.00

(32.2)%

CNY

28.09

29.89

34.56

15.5

14.5

12.6

OLD

790.00

30.62

35.07

BABA(Alibaba)

O

USD

131.35

180.00

(11.0)%

CNY

65.41

28.97

42.38

13.7

30.9

21.1

OLD

30.96

51.16

9988.HK(Alibaba)

O

HKD

128.60

176.00

(23.7)%

HKD

8.40

3.91

5.71

13.3

28.6

19.6

OLD

4.18

6.90

NTES(NetEase)

O

USD

113.60

150.00

(13.0)%

CNY

58.02

60.09

67.39

13.3

12.9

11.5

OLD

62.95

68.81

9999.HK(NetEase)

O

HKD

177.70

235.00

(24.9)%

HKD

12.76

13.22

14.83

13.9

13.4

12.0

OLD

13.85

15.14

JD(JD)

O

USD

31.25

36.00

(45.4)%

CNY

18.15

20.92

28.16

11.7

10.2

7.6

OLD

34.00

19.35

26.90

9618.HK(JD)

O

HKD

120.70

140.00

(59.2)%

HKD

10.44

12.02

16.19

11.6

10.0

7.5

OLD

135.00

10.95

15.22

PDD(PDD)

M

USD

102.10

132.00

(20.3)%

CNY

72.38

82.92

91.15

9.6

8.4

7.6

BZ(Kanzhun)

M

USD

13.50

16.50

(34.5)%

CNY

7.87

8.85

10.78

11.7

10.4

8.5

3690.HK(Meituan)

M

HKD

86.30

85.00

(82.8)%

CNY

(3.00)

(3.20)

3.10

(25.0)

(23.4)

24.2

ASIAX

1,783.03

SPX

6,967.38

PRICETARGETCHANGE/ESTIMATECHANGEINBOLD

O-Outperform,M-Market-Perform,U-Underperform,NR-NotRated,CS-CoverageSuspendedSource:Bloomberg,Bernsteinestimatesandanalysis.

INVESTMENTIMPLICATIONS

WhiletheimplicationsofexponentialAIgrowthlikelycontinuestobedebatedforourInternetsectorcoverage,wethinkthedirectionoffooddeliveryandquickcommerceinvestmentsarenearaturn.Accordingly,wethinktherearereasonstobe

hopefulthatbettertimesareaheadfortheChinaInternetsector,afteraweakfirstfewmonthsof2026.

Incontrastwiththeongoing“willthey,won’tthey”debatesurroundingmoremuscularregulatoryactioninfooddeliveryand

quickcommerce,wethinkdecliningFCFgenerationforcingAlibabatochoosebetweenstrategicprioritiesrepresentsthemuchmoreconvincing-anddurable-argumentforanormalisationofcompetition.AlibabacontinuingtofocusonhighAOVorders

likelykeepssomepressureonMeituan.ButloweroveralllossesfreesupcapitaltobedeployedtowardsAlicloudandbroaderAIdevelopment.High“AllOther”losseswilllikelycontinuetoconstrainPEbasedvaluationsforAlibaba.Butmoreinvestor-friendlycapitalallocationshouldhelponthemargin.

Acrossoursectorcoverage,weexpectinvestorstoembraceJD’srenewedfocusonprofitability,andexpectlowerH2

2026compstosupporthopesforgrowthre-acceleration.Thee-commercemarketinChinaremainslowgrowthandhighlycompetitive…butJD’sshareslooktoocheapevenif2027EEPSdoesn’tgetallthewayto2024levels.

Weremainconstructiveonvideogaming,andhavebeenencouragedbyinvestorsbackingawayfrompeakProjectGeniefear.Thatsaid,inflectionsinTencentandNetEase’sshareslikelydependonAIbreakthroughs-andpipelinesurprises-respectively.

WehaveupdatedourpricetargetsforTencentandJD.TheformerisbasedonlowerearningsestimatestoreflecthigherAI

spend,multipliedbyanunchanged20xFY+1PEmultiple,whilethelatterreflectsanunchanged9xFY+1(e.g.quarter5-8)PEmultiple,incorporatinghigherearningsestimatesintheouteryearsasthecompanyprioritisesprofitability.

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP2

RobinZhu+85221232659

robin.zhu@

16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP3

VALUATIONCOMPSTABLE

EXHIBIT1:AsianInternetvaluationcomparison

Rating

Price

target

Last

price

Crncy

Marketcap

(US$mn)

2026E

PE

2027E

2028E

2026E

EV/sales

2027E

2028E

ChinaInternetcoverage

Tencent

O

780

499.00

HKD

581,189

14.7x

12.7x

11.0x

5.0x

4.4x

3.8x

PDD

M

132

102.10

USD

144,946

8.8x

8.0x

6.9x

1.1x

0.8x

0.4x

Meituan

M

85

86.30

HKD

68,065

n.a.

24.7x

12.9x

1.0x

0.9x

0.8x

NetEase

O

150

113.60

USD

71,931

13.2x

11.7x

10.9x

3.2x

2.9x

2.6x

BossZhipin

M

16.5

13.50

USD

6,527

10.9x

8.9x

7.8x

2.5x

1.8x

1.3x

JD

O

36

31.25

USD

45,415

10.7x

7.9x

6.2x

0.2x

0.2x

0.2x

Alibaba

O

180

131.35

USD

313,587

30.4x

21.3x

18.7x

2.1x

2.0x

1.8x

ChinaInternetother

Kuaishou

45.66

HKD

25,541

10.2x

8.9x

7.9x

1.0x

0.9x

0.9x

Bilibili

25.00

USD

10,626

25.6x

19.4x

14.9x

1.7x

1.6x

1.5x

Baidu

118.23

USD

40,228

14.6x

12.5x

10.5x

1.2x

1.1x

1.0x

VIPshop

14.87

USD

8,280

5.9x

5.6x

5.4x

0.4x

0.3x

0.3x

TencentMusic

9.73

USD

15,071

10.2x

8.9x

8.0x

2.0x

1.8x

1.7x

T

52.57

USD

34,360

13.0x

11.4x

10.1x

2.7x

2.4x

2.1x

KEHoldings

16.50

USD

19,261

21.1x

18.2x

17.4x

1.1x

1.1x

1.0x

AsianInternet

Naver

O

340,000

211,500

KRW

22,462

14.3x

12.6x

11.4x

2.0x

1.7x

1.5x

Kakao

O

80,000

49,650

KRW

14,893

32.8x

26.9x

20.5x

1.9x

1.5x

1.3x

Hybe

O

500,000

256,500

KRW

7,486

21.4x

21.5x

17.2x

2.6x

2.1x

1.9x

Coupang

U

17

20.72

USD

37,880

120.6x

43.9x

30.6x

0.9x

0.8x

0.7x

SeaLtd.

85.60

USD

50,677

23.5x

17.7x

14.5x

1.5x

1.2x

1.1x

Grab

3.82

USD

15,664

39.8x

25.1x

18.4x

2.7x

2.2x

1.9x

USInternet

Amazon

249.02

USD

2,677,273

27.2x

22.9x

19.4x

3.4x

3.0x

2.7x

Alphabet

332.91

USD

4,013,567

27.3x

23.6x

20.3x

9.6x

8.3x

7.2x

Meta

662.49

USD

1,676,336

20.4x

17.6x

13.9x

6.7x

5.7x

4.9x

Netflix

106.28

USD

448,731

32.9x

27.7x

23.5x

8.9x

8.0x

7.2x

Uber

72.91

USD

148,951

21.4x

16.5x

13.1x

2.7x

2.3x

2.0x

Spotify

511.36

USD

105,255

33.2x

27.0x

22.4x

4.2x

3.7x

3.3x

DoorDash

163.55

USD

71,050

30.0x

23.1x

19.7x

3.8x

3.2x

2.7x

PricingdateApril15,2026.ThevaluationmultiplesofourChinaandAsianInternetcoveragearebasedonBernsteinestimates;theothercompaniesshownreflectBloombergconsensusestimates.

Source:Corporatereports,Bloomberg,Bernsteinestimatesandanalysis.

RobinZhu+85221232659

robin.zhu@

16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP4

DETAILS

ALOTRIDESONWHATALIBABADOESNEXT

Wewritearegularlook-backaftereveryquarter,totrytosummariseourtakeawaysfromreportingbyourcoveragecompanies,andthebroadersector.ForQ4,theproximityofreportingtoQ1pre-closediscussionsmeansthesetendtoofferusefulcolourontheset-upfortherestoftheyear.Topdown,Q4reportingwaschieflycharacterisedbyweakQ4macro(nothelpedbyalateCNYlatepullinggiftingandothersourcesofseasonaldemandintoQ1),withe-commercelookingworsthit.Theadsmarket

faredsomewhatbetter,withinwhichthemigrationofaddollarsinfavourofrecentsharewinners(e.g.Tencent,Xiaohongshu,Bilibili)continued.Videogaminghasremainedarelativesafehaven,evenifthedeferredrevenuerecognitionsituationat

NetEasecontinuestodriveconfusion.

Narrativewise,thesinglebiggestshiftinthesectorwasdrivenbytheleapinagenticAIcapabilitiessincethestartof2026.WehavemixedfeelingsabouttheburstofOpenClawexcitementinChina,whichalreadyseemstobefadingtosomedegree.But

there’snodebatethatnewlyunlockedcapabilitiesputtheworldonapathofacceleratedtechnologychange.Thefactreasoningmodelsandagenticworkflowsgeneratemassivelyhighertokenconsumptionhasbeenaboonforthehyperscalerbusinesses.

FortheInternetplatformsmorebroadly,therealityofinferencecostsmeansmassAIdeploymentrepresentsaneconomic

problemasmuchasatechone.OurownexperimentationwithagenticAIservicesandvibecodinghasmostlyaddedtoour

long-termbullishviewonAIasadriverofproductivitygains.ButwhenandhowtopayforabillionChineseconsumersusingAIserviceswilllikelyremainanimportantquestionforwhereourcoveragecompaniesgointhemediumterm.

Alibabahasadecisiontomakeonspend…AIisprobablytheobviousanswer

Incomparison,wethinkthequestionofwhenAlibabadecidestorejigitscapitalallocationtofocusmoreonAIarguably

representsthemoreconsequentialoneforstock-pickingovershortertimehorizons.Byourcount,reportingfromAlibaba,Meituan,andJDpointedtoRMB36bnofcombinedlossesinfooddeliveryandquickcommerceinQ4,bringingtotalspendsinceQ2toc.RMB110bn.FreshippogrowacceleratinghasprobablypartlybeendrivenbyAlibaba’sfooddeliveryand

quickcommerceinvestments.Ontheotherhand,AlibabaCMRgrowing0.8%intheDecemberquarterandsayc.3-4%ona

normalisedbasisacrosstheDecemberandMarchquarters(tosmoothoutdistortionscausedbyCNYtiming,andAlibaba’s

decisiontobookmoremarketingspendcontrarevenue)strikesusandmostinvestorsasafairlymeagrereturninAlibaba’scoreTaobao&Tmallecosystems.

OneofthemorenotabledevelopmentsinrecentweekswastheSAMR’spublishing,un-publishing,thenre-publishingofits

articlecallingforanendtothefooddeliverywars.Comparedwiththeongoing“willthey,won’tthey”debatearoundregulatoryaction,wethinkAlibaba’sstrategicprioritiesrepresentamoreimportantdriverofwhathappensnext.Toillustrate,Exhibit2andExhibit3contrastAlibaba’scashincomingandoutgoingswhichflowdowntofreecashflow.Intheformerwe’veincludedcoreTaobao&Tmall(excludingQuickCommerce)EBITAandCloudEBITA,whichaddeduptoRMB59.5bninQ3,andRMB207.0bninthelasttwelvemonths.

OutgoingsincludeAIcapex(assumingthisapproximatestogroupcapexotherthanintheJune2025quarterwhenQuick

Commerceinfrastructureinvestmentscontributed),AIexpenses(usingAllOthersegmentlossesasaproxy),QuickCommercelosses,andEBITAlossesinInternationalandothernon-coresegments(whichhavebecomefairlyminorinrecentquarters).

TheargumentforprioritisingAIisstraightforward

Forthesakeofsimplicitywe’veignoredworkingcapitalmovesandotherminorcontributorstoAlibaba’soperatingcashflows,buttheconclusionthatAlibaba’scashoutflowsincreasinglyexceedsinflowsstillbecomesclear(seeExhibit4).ThecompanyhadoverRMB600bnofnetcashandequivalentsattheendofDecember,andhasexpressedawillingnesstodipintoitscofferstoinvestontwofronts.WevoicedcautionafterQ42025reportingintheUSInternetsectorhadpointedtoinvestorstiringof

AIinvestmentsfundedthroughcashburn-thesubsequentperiodhasreflectedsimilarattitudespermeatingthroughtheChinaInternetsector.

Ontheflipside,thefactremainsthatAlibabaownsapowerfulcollectionofbusinessesinChina’slargesthyperscalerbusiness,atop-10globalAImodelinQwen,andoneofChina’sbestcomputechipdevelopmentprograms.WegenerallyagreewiththeassessmentthatChineseenterpriseswereshiftingfromAIspendasacontributortoR&DspendtoconsideringitanessentialfactorofproductiontobecostedthroughtheCOGSline.Yeartodate,thecombinationofagenticAIprogressdrivingan

explosionintokenconsumptionandongoingtightnessinthesupplyofcompute(despiteSuperMicro’sapparentbestefforts…)

RobinZhu+85221232659

robin.zhu@

16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP5

hasdrivenAlicloud,TencentCloud,andBaidutoallcutbackonincentivesandraiseheadlinepricesforavarietyofservices.ForalltheconcernsaboutBytedancecompetingwithnoregardforprofitability,third-partydatasuggestsAlicloudhasatleastkeptpace-ifnotslightlygainedshareinrecentquarters.

OursenseisAlibabacontinuestofavourover-ratherthanunder-investmentinAI.Ergo,wethinkthere’sreasontobelievethe

pivotawayfromquickcommercelosseswillremaindurabletoalargeextent.Hard-to-quantifyfactorslikeorganisationalinertia,andtheinternalreconciliationprocessbetweeninvestmentandreturnwilllikelyinfluencehowthemessagingisdelivered.Ontheotherhand,thisisamanagementteamwhichhasahistoryofstrategicpivotsaftermajorinvestmentcycles.

ThemarkethasbeguntopriceintheimplicationsofanAlibabapivot

TheimmediateimplicationsofaneventualAlibabapivotawayfromfooddeliverycompetitionislikelytobepositiveforallof

Alibaba,JD,andMeituan’sshares(seeExhibit5andExhibit6).ForAlibaba,thecombinationoflowerfooddeliverycashburnandoveralllosses(enablingagreaterfocusonAI)couldhelpimproveinvestorperceptionsofcapitalallocation,aswellashowthestocklooksvaluedonthebasisofgroupPEmultiples.IncreasedAIinvestmentshouldhaveafairlyclearpayoff,inlightofongoingtightnessinthedomesticmarketforcompute,andZ.aidemonstratingpricingpoweronhighcomplexitytokens.

Meituan’sshareshavealreadyreactedpositivelytothecombinationofspeculationoverwhenmoremuscularregulatory

actionmightbeforthcoming,andtheanticipationofanimprovingsecondderivativeinthebusiness.GuidancefromJDona

continuedmoderationofcompetitiveintensityinAprilshouldbodewellforQ2earningscomparedwithstreetestimates.On

theflipside,wethinkthemostlikelygo-forwardscenarioisonewhereAlibabamaintainsalargerpresenceinfooddeliveryandquickcommercethanin2021,withinvestmentspendincreasinglyfocusedonhighvalueorders.WethinkMeituanmade50

centsRMBperfooddeliveryorderin2021…inanenvironmentwhere

Ele.me

wasanafterthoughtwithinthebroaderAlibabaorganisation(seeExhibit7).CompetitionwithBytedanceinIn-store,Hotel&Travelbearswatchingaswell.

ForJD,lowercompetitivetemperatureinfooddeliveryshouldgivethecompanyaircovertoscalebacklossesinitsfooddeliveryendeavours.ThelattercontinuestodriveGeneralMerchandisegrowthtosomedegree,andweexpectlowerH22026compstomeanElectronics&Appliancesgrowthimproves.Thestockremainscheaplyvalued,managementsponsoreda3.4%yieldviathecompany’sdividend,andall-inshareholderreturnyieldshouldbehigherstillassumingsomebuybacks.

Tencentwillneverbethehighestbetastock,butremainsthesensibleoptioninourview

Yeartodate,tradingacrossourChinaInternetcoveragehasbeentypicalofinvestorattitudestowardsinvestmentcycles,

specifically…investinginAIisgreat,untilitcomestoactuallyinvestinginAIthroughtheP&L.WhileearlyadopterexcitementhasdrivenmassiveARRgrowthfor

thelikesofMinimaxandZ.ai

(fornowARRseemstobetheonlypartoftheP&Lthatmattersforthesecompanies…),considerableskepticismpersistsaroundtheInternetplatforms’abilitytomonetiseconsumer-facingAI-

eveninthe“jamtomorrow”scenario.

Wewroteafairlycautious2026outlookfortheChinaInternetsectorinDecember(

LINK

),andcontinuetoconsidermediocremacroandquestionsaroundtheregulatorycycleheadwinds.AllsignspointtotheAIinvestmentcycle(drivenbymodeltrainingandinferencecosts,andtheneedtopromotenewfunctionality)beingamulti-yearevent.SpecificallyinthecaseofTencent

however,thecompany’scorebusinesscontinuestoperformstrongly,andweremainoftheviewthatgamingandadsstandtobenefitmeaningfullyfromAIimprovements.IncontrastwiththeStreet’stendencytofadeouteryeargrowthprojections,our

mostrecentinteractionswiththecompanyhavepointedtocontinuedstrengthingaming,andsequentialaccelerationinads.FallingmobileplatformfeesrepresentatailwindforTencentprofitgrowth.IncontrastwithplateauingusertrafficdrivingPDDmanagementdeeperintomorehands-onworkservingChina’shinterland,Tencent’sMiniPrograms/Shopsecosystemremainslightlymonetised.

Zoomingout,AIagentappengagementdatacontinuestosupportthenotionthatdisruptingWeChatisharderthanitsounds.TheAIcatalystquestionwillmostlikelytaketimetoanswer.Ontheotherhand,we’dnoteTencent’svaluationnowstandson

12.7x2027EPEonournumbers,or10.7xexcludingsayRMB60bnofAIspend,or8.9xifwefurtherexcludec.$95bnofpublicequityinvestments.

SurelyJDisstilltoocheap?

SentimentaroundJDhasimprovedinrecentmonths,asinvestorattentionpivotedfromhighelectronicscomps-lappinghighgovernmentincentivesforappliancepurchases-toearningsdownsideprotection,andtop-linere-accelerationsupportedbyeasierH22026comps.OurlatestdiscussionswithJDpointtotheformercontinuetoholdtrue,withQ1profitssoundingahead

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16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP6

ofexpectations(helpedbylowerfooddeliveryspend,butalsosolidcoreRetailmargins).

JDhasatrackrecordofrecyclingsavingsearlyintheyearintohighermarketingspendduringpeake-commercepromotions,

but2026streetnumberslookdoableinthecontextofJDsignallingbettere-commercegrossmargins,andtheintensityoffooddeliverycompetitioncontinuingtowaneacrossthegroupintoApril.ProjectedspendonJD’soverseasventureshassounded

manageabletoo,withthefocusforJoyBuycontainedwithinahandfulofkeymetrosinWesternEurope.

Puttingittogether,JDnowtradeson10.7x2026Eand7.9x2027EPEonourlatestprojectionsforthecompany’searnings.

Takingthecompany’ssuggestionsthat2027Eprofitscouldexceed2024levelsatfacevaluewouldimply2027EPEfallsto

somethinglike7x.Inthemeantime,assuming$1bnofbuybacksthis(e.g.halftheremainingauthorisation)implies2.3%capitalreturnyieldatcurrentprices.Inourdiscussions,thecompanysignalledadesiretomaintainsteadycapitalreturns.

CynicswillarguethatJDhasgonethroughtheseperiodsofgreaterinvestorfriendlinessbefore,andthebroadere-commercemarketremainslowgrowth-andcontestedbytoomanyplayers.ButthemagnitudeofcostsavingsfromlowerfooddeliveryspendlikelyremainsmuchlargerthanwhatJDcanrecycleintospendonnewadventures,andwethinkthebalanceofrisk-

rewardfavoursupmorethandownfromhere.

EXHIBIT2:WeexpectAlibaba’scapitalallocationchoicesinthecomingmonthstohaveimportantimplicationsforseveralotherstockswecover

FY3/24-FY3/26E:Alibabaincoming

RMBbn

70

60

50

40

30

20

10

0

Jun-23Sep-23Dec-23Mar-24Jun-24Sep-24Dec-24Mar-25Jun-25Sep-25Dec-25Mar-26E

TTGEBITACloudEBITA

Source:Corporatereports,Bernsteinestimatesandanalysis.

RobinZhu+85221232659

robin.zhu@

16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP7

EXHIBIT3:Whilecoree-commerceandcloudEBITAhavetrackedsideways,spendonAIandquickcommercehasexploded,eatingintocashgeneration

FY3/24-FY3/26E:Alibabaoutgoing

RMBbn

10

0

-10

-20

-30

-40

-50

-60

-70

-80

Mar-25AIcapex

Jun-25

Sep-25

Dec-25

Mar-26E

Jun-23Sep-23Dec-23Mar-24Jun-24Sep-24Dec-24

QClossAIDClossAllOtherloss

Source:Corporatereports,Bernsteinestimatesandanalysis.

EXHIBIT4:OursenseisAlibabaremainssteadfastinitsdesiretoinvestaheadinAI,scalingbackquickcommercelossesshouldenablehighercapex,whilehelpingtobalancethebookssomewhat

FY3/24-FY3/26E:Alibabafreecashflows

RMBbn

70

60

50

40

30

20

10

0

-10

-20

-30

Jun-23Sep-23Dec-23Mar-24Jun-24Sep-24Dec-24Mar-25Jun-25Sep-25Dec-25Mar-26E

Source:Corporatereports,Bernsteinestimatesandanalysis.

RobinZhu+85221232659

robin.zhu@

16April2026

CHINAINTERNETBERNSTEINlsocIeTecENeRAlECROUP8

EXHIBIT5:Weestimatec.RMB120bnofcombinedlossesinquickcommercesinceQ22025

2025:Alibabavs.Meituanvs.JDFDlosses

RMBbn

20

10

0

-10

-20

-30

-40

-50

-60

-70

Q12025Q22025Q32025Q42025

AlibabaMeituanJD

Source:Corporatereports,Bernsteinestimatesandanalysis.

EXHIBIT6:Marketingspendhasrisensharplyacrossthegroup,butmaynowbenearingaturn

2025:Sales&marketingexpenses

RMBbn

0

Q12025Q22025Q32025Q42025

AlibabaMeituanJD

80

70

60

50

40

30

20

10

Source:CorporatereportsandBernsteinanalysis.

EXHIBIT7:Wedostillquestionwhatfooddeliveryindustryprofitabilitycanreturntothough,consideringMeituangenerated50centsRMBofoperatingprofitperorderin2021…beforeAlibabacededthemarkettoMeituan

2020-2025:Meituanfooddeliveryoperatingprofitperorder

OP/order(RMB)

2.5

2.0

1.5

1.0

0.5

0.0

-0.5-1.0-1.5-2.0-2.5

-3.0

Q1

2020

Q4

2022

Q3

2024

Q1

2021

Q4

2021

Q4

2023

Q3

2025

Q1

2022

Q2

2020

Q3

2020

Q4

2020

Q2

2021

Q3

2021

Q2

2022

Q3

2022

Q1

2023

Q2

2023

Q3

2023

Q1

2024

Q2

2024

Q4

2024

Q1

2025

Q2

2025

Q4

2025

Source:Corporatereports,Bernsteinestimatesandanalysis.

SECTORVALUATIONLOOKSBACKNEAR2022-2023LEVELS

Thefollowingareagroupofchartswemonitorasmeasuring