Latest Search
Quote
| Back Zoom + Zoom - | ||||
|
<Research>G Sachs: Cloud and Data Center Subsector Still Most Favored for 2H; Alibaba (BABA.US), GDS (GDS.US). VNET (VNET.US), Kingsoft Cloud (KC.US) Recommended
Recommend 111 Positive 172 Negative 81 |
||||
|
||||
|
Goldman 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) capex/ FCF outlook of hyperscalers; and 5) the form factors of Agentic AI and interference among agents. The broker forecast 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 (with key ideas still being: BABA-W (09988.HK)(BABA.US) (included in its APAC CL Buy), GDS-SW (09698.HK), VNET Group, Inc. (VNET.US) and KINGSOFT CLOUD (03896.HK)(KC.US)). Despite slower-than-expected existing capacity expansion and move-in pace in 1Q, the broker expected cloud service price hikes and continued Token expansion to drive cloud revenue growth and margin expansion, alongside higher capex by hyperscalers. The broker estimated that ByteDance, Baidu, Alibaba and TENCENT (00700.HK) (BBAT) will record total capex of USD100 billion for full-year 2026, with a higher weighting in 2H, supporting accelerated QoQ growth for data centers in 2H. Meanwhile, soft macro 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) (NTES.US) is a new recommendation, alongside TENCENT (00700.HK)), while downgrading e-commerce and mobility to third place (but it reiterated JD-SW (09618.HK) (JD.US) as a key recommendation for 2H26, as it believed 2Q will be the last tough quarter for comparison, with revenue and profit expected to resume YoY recovery in 2H). Among AI model companies (ranked fourth), the broker highlighted MINIMAX-W (00100.HK), citing upside potential in ARR. The broker believed BABA-W has bottomed its EPS downgrade cycle (with an inflection in EPS expected in 2H26), while TENCENT has bottomed in valuation multiples. These are potential signs of share price support, with an inflection anticipated in 2H26. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
AASTOCKS Financial News |
||||
Copied to Clipboard
 |
||||
