Goldman Sachs Forecasts Mixed Q1 Results for Major Chinese Internet Stocks, Maintains Preference for Cloud Computing and Data Centers

Goldman Sachs has released a research report stating that the upcoming first-quarter results for major Chinese internet stocks are expected to be mixed. TENCENT and BABA-W are scheduled to report on Wednesday. The bank predicts several key features: 1) stable revenue growth, with cloud revenue growth standing out as a highlight; 2) a potential increase in AI-related capital expenditures due to the proliferation of agentic AI-driven tokens; 3) significant non-cash accounting gains (GAAP/IFRS) from mark-to-market adjustments on investments in AI model companies; and 4) fundamental margin pressure from the internet giants' shift towards AI, partially offset by potentially faster improvements in the unit economics of quick commerce and delivery businesses.

Looking ahead to the second quarter and the second half of the year, Goldman Sachs expects a reacceleration in profit growth for transaction platforms. Combined with positive signals from U.S. mega-cap tech companies, this is anticipated to create a more favorable environment. The bank maintains its sub-sector preferences, ranking "Cloud Computing & Data Centers" as its top choice. This includes Alibaba, GDS, VNET, and KC. Its second preference is "E-commerce & Mobility," followed by "Gaming & Entertainment."