1、 Watchlist the stock on Insights Direct to receive prompt updates ed-BM/JS/sa-CS/AH 2026 outlook:Staying with AI winners Cloud remains the primary way to monetise AI;China AI cloud market sets to triple to RMB154bn by FY28F,with Alibaba&Baidu as key beneficiaries AI super-app development will be a k

2、ey 2026 focus to deepen consumer wallet share;Tencent leads on ecosystem,while Alibaba is catching up We prefer Cloud which captures most of the AI economics,and Entertainment where AI already delivers tangible revenue and ROI uplift Baidu,Kuaishou as tactical picks on valuation;Alibaba,Tencent as l

3、ong-term compounders F Fullull-stack stack AI AI with chip design capability a core edgewith chip design capability a core edge.Google provides the clearest global blueprint for full-stack AI,showcasing solid cloud margin expansion.The push for domestic substitution amid AI chip export controls make

4、s it more important in China.Alibaba and Baidu are the most advanced in this regard,integrating leading cloud services,foundational models,and proprietary AI chips(PPU and Kunlun)already used by external clients.For Baidu,we estimate that a potential Kunlun Xin IPO could unlock RMB90bn(30%of current

5、 mkt cap),and expect official IPO filing to cataylse further re-rating.AI monetisation AI monetisation led by led by cloudcloud and coreand core businessbusiness uplift,while uplift,while AI application becoming new traffic entrance.AI application becoming new traffic entrance.Domestically,cloud inf

6、rastructure remains key for monetisation as model and agent products are aggressively priced,keeping cloud players key beneficiaries.At consumer front,AI application is becoming an increasingly important traffic entrance we think Tencent is best positioned with its superior ecosystem and strong prod