A Look Ahead | Earnings reports from star tech stocks are coming in! Will Tencent and Alibaba's releases this week signal a new round of 'rally'?

In mid-to-late March, major technology stocks will release their earnings reports in quick succession.

$TENCENT (00700.HK)$、 $BABA-W (09988.HK)$ / $Alibaba (BABA.US)$The latest quarterly earnings report will be released this week. $XIAOMI-W (01810.HK)$ 、 $KUAISHOU-W (01024.HK)$ 、 $MEITUAN-W (03690.HK)$ 、 $PDD Holdings (PDD.US)$ Other technology stocks are also set to disclose their latest quarterly performance reports one after another.

In the first two months of 2026, the technology sector, represented by tech stocks,... $Hang Seng TECH Index (800700.HK)$...showed weakening fluctuations, with a cumulative decline of about 7%. In March, driven by the AI wave led by OpenClaw, tech stocks have seen a slight rebound recently. Goldman Sachs stated that the overall Q4 results of China's internet industry will face pressure, but the pessimistic expectations have already been priced into the stock prices. With the release of earnings from tech giants like Tencent and Alibaba, could this be an opportunity for strategic investment?

Based on market expectations, Futu Information has compiled earnings forecasts for some popular Chinese technology stocks for investors' reference.

This week, two major technology giants, Tencent and Alibaba, will release their results in turn, with the latest quarterly earnings scheduled for release on Wednesday (March 18) and Thursday (March 19), respectively.

According to Bloomberg consensus estimates,$TENCENT (00700.HK)$ Q4 revenue is expected to reach 194.074 billion yuan, representing a year-on-year increase of 12.54%; adjusted net profit is projected at 64.926 billion yuan, reflecting a year-on-year rise of 17.38%.

In terms of gaming operations, Q4 revenue is expected to reach RMB 56.89 billion, a year-on-year increase of 16%, including an anticipated domestic gaming revenue of RMB 37.47 billion, up 13% year-on-year; international gaming business revenue is expected to be RMB 19.97 billion, with growth reaching 25%. Marketing services (advertising) revenue is projected to hit RMB 41.6 billion, growing by 19% year-on-year.

UBS Group noted that Tencent’s Q4 gross margin is expected to improve by 2.9 percentage points, mainly driven by the increased proportion of high-margin self-developed and PC games, as well as contributions from video accounts and e-commerce technical service fees, which will help offset the rising investment costs in AI.

JPMorgan stated that Tencent's AI development will have a greater impact on the company's future stock price trends. Investors should focus on “AI signals” that can drive both market sentiment and fundamentals. This includes capital expenditure intensity and pace for 2026, visibility of AI chip procurement and supply, specific progress in foundational model quality (especially multimodal and reasoning capabilities), and most importantly, evidence of commercialization through monetization via WeChat (search/feed/mini-program workflows) and advancements in ad tech (precise targeting, creative automation, ROI).

$BABA-W (09988.HK)$ / $Alibaba (BABA.US)$Third Finance expects revenue to reach RMB 289.795 billion, increasing by 3.44% year-on-year, while adjusted net profit is forecasted at RMB 29.579 billion, representing a decrease of approximately 42% year-on-year.

According to JPMorgan's report, Alibaba’s core e-commerce growth is expected to slow down due to a weak macro consumption environment. The annual growth rate of core customer management revenue (CMR) is anticipated to decelerate from 10% in Q3 to 1%, dragging EBITA (earnings before interest, taxes, depreciation, and amortization) of Taobao/Tmall Group (excluding rapid commerce) down by 8%. It also predicts that losses in local life services will narrow from RMB 35 billion in Q3 to RMB 21 billion as subsidies are reduced. However, given management's 'market share first' strategy, the path to break-even is likely to be slower.

JPMorgan forecasts cloud and AI businesses to be the brightest spot, projecting that the Cloud Intelligence Group’s revenue growth will accelerate from 34% in Q2 to 37%. As 'generative AI' workloads transition from pilot phases to broader deployment, cloud business revenue growth is expected to continue accelerating over the next few quarters, showcasing Alibaba’s ability to capture China’s AI demand.

Overall,Goldman Sachs predicts that overall net profits in China’s internet industry will decline by 30% year-on-year in Q4, marking a further expansion compared to the declines seen in Q2 and Q3.The main drag comes from significant subsidies and losses in Alibaba and Meituan’s instant retail segments. Goldman Sachs believes that although Q4 earnings growth for Chinese internet giants may slow, the stock price declines since the beginning of the year have largely priced in these concerns.

The core contradictions within China’s internet sector are undergoing a fundamental shift:Investments in non-AI businesses have peaked, while performance increments driven by AI are just starting to emerge.

On one hand, antitrust investigations in areas such as food delivery and instant retail are expected to drive industry competition back to rationality, with narrowing subsidies directly bringing about profit recovery. Goldman Sachs pointed out that the national-level antitrust investigation into the food delivery industry may lead to a stabilization of market shares among the three major food delivery platforms: Alibaba, Meituan, and JD.com, with subsidy competition becoming more rational. This is expected to significantly improve the income statements of companies like Meituan by 2026.

On the other hand,Cloud business was the highlight in the Q4 earnings report.Goldman Sachs stated that the surge in AI agents is opening up entirely new spaces for token demand, cloud business, and commercial monetization, which is the core variable determining the future market value of tech giants. Goldman Sachs expects this will bring upward potential for revenue and pricing for cloud services like Alibaba Cloud and Tencent Cloud, with Alibaba Cloud's revenue growth projected to accelerate to 38% by December 2025.

Looking ahead, several institutions believe that technology stocks represented by Hang Seng Tech may have fallen to an attractive 'valuation-for-money' level. The focus going forward should be on signals indicating a bottoming out for Hang Seng Tech.First, whether the AI business layout can exceed expectations, and second, waiting for the release of major players’ results; once negative factors are fully priced in, it could help stabilize Hong Kong-listed tech stocks.Invesco Great Wall believes that pessimistic sentiment in Hang Seng Tech has been largely released at current valuation levels. Leading Hong Kong-listed tech companies may see an improvement inflection point in profitability, with the consensus expectation for index EPS growth exceeding 40% in 2026, a trend that could gradually be reflected in rising asset prices.

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