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<Research>Jefferies: BABA-W's Results Offer Insights; Gap in Capital Expenditure as Share of Rev. Between CN 'BAT' and US Hyperscale Cloud Providers Widens Last Qtr
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Jefferies has issued a report on China's internet industry, saying that BABA-W (09988.HK)'s results offered insights into the industry. (1) Despite supply chain fluctuations, AI demand remained strong; (2) BABA-W's instant commerce business is expected to markedly shrink its QoQ loss for the quarter ending December 2025; (3) The goal of "Qianwen" is to become the most advanced AI application capable of solving multi-scenario problems; (4) BABA-W will release greater synergies with its instant commerce business. After summarizing the quarterly results and BABA-W's performance, Jefferies reiterated its outlook for the sector in 2026, predicting the market to focus on the strategic directions of companies like MEITUAN-W (03690.HK), TENCENT (00700.HK), Pinduoduo (PDD.US), JD-SW (09618.HK), and BIDU-SW (09888.HK) for 2026. Jefferies also praised Alibaba Cloud for its rapid growth in the quarter. Regarding the differences between China's "BAT" (Baidu, Alibaba, and Tencent) and US hyperscale cloud providers, Alibaba Cloud's revenue grew by 34% YoY for the quarter ending September, compared to the YoY growth of 40% and 33.5% recorded by Microsoft (MSFT.US)'s Azure and Google Cloud. While robust growth is still anticipated to continue in the December quarter, one of the several indicators shows that the gap in capital expenditure as a share of revenue between China's "BAT" and US hyperscale cloud providers widened last quarter. In 3Q25, TENCENT's capital expenditure declined, and its annual capital expenditure guidance was lowered. BABA-W's capital expenditure also diminished QoQ. Jefferies suggested that investors should pay attention to representative companies in the following sub-sectors, including BABA-W, TENCENT, TRIP.COM-S (09961.HK), BIDU-SW, NTES-S (09999.HK), KUAISHOU-W (01024.HK), TME-SW (01698.HK), JD-SW, MEITUAN-W, BILIBILI-W (09626.HK), Pinduoduo, and TONGCHENGTRAVEL (00780.HK). AAStocks Financial News |
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