【🎁Earnings Showdown】Tencent, Alibaba to Report This Week! AI Becomes the Biggest Variable—Who Will the Market Favor?

This week, Hong Kong's tech sector will see key earnings reports, with Tencent Holdings (March 18) and Alibaba (March 19) set to release their results!

The market’s attention is almost entirely focused on the AI theme. Will Tencent, leveraging its Agent ecosystem in 'Lobster,' catch up from behind, or will Alibaba rely on its solid foundation of 'Cloud + Qwen' to maintain steady progress?

➡️Tencent: Q4 adjusted net profit expected to increase by 18%! Can AI 'shrimp farming' open up new opportunities?

As a giant with the WeChat and QQ social media empire,$TENCENT (00700.HK)$/$Tencent (TCEHY.US)$is fully capitalizing on the benefits of AI empowering its existing ecosystem.

The market expects Q4 revenue to grow approximately 13% year-over-year, with adjusted net profit increasing around 18%. The gaming business (+18%) and advertising business (+18%) remain strong growth drivers, showing an extremely solid fundamental position.

The recent flurry of announcements regarding Tencent’s AI Agent strategy has made the market suddenly realize—Tencent isn’t lagging in AI application implementation but is instead preparing something big:

🔎‘Lobster’ Family Bucket:Products from the OpenClaw ecosystem, such as WorkBuddy and QClaw, have been unveiled in quick succession, showing that AI agents are transitioning from concept to implementation.

🔎 WeChat AI Agent:As a super app with 1.4 billion monthly active users and a mini-program ecosystem, WeChat is considered the most natural ‘hands and feet’ for AI agents.Market rumors suggest that WeChat is developing its own AI model and a 'top-secret' AI agent, aiming to enable 1.4 billion users to directly invoke the mini-program ecosystem using natural language.This includes automatic ride-hailing, food delivery, hotel booking, and fundamentally reshaping human-computer interaction.

It is precisely this immense potential of 'ecosystem + AI' that has led many institutions to see a turnaround opportunity while Tencent’s valuation remains at a historical low (with a forward P/E of around 20x).

Guosen Securities pointed out that Tencent’s natural advantage of users + scenarios within its ecosystem makes it one of the best-positioned companies in the AI era; Citi also views WorkBuddy as a key milestone in the development of China's AI agents.

Of course, concerns remain: Will aggressive AI capital expenditures erode profit margins? When will Tencent's self-developed HunYuan large model rise to the top tier? Therefore, this Q4 earnings report will see the market paying close attention to whether AI-driven advertising efficiency gains can be sustained and if there are any substantial breakthroughs in WeChat’s AI agent development.CICC believes that if Tencent delivers results better than market expectations, its narrative logic could see a valuation turnaround similar to Google's in 2025.

➡️Alibaba: Could cloud business soar by 35%? Can enterprise-grade AI agents offset e-commerce pressures?

Compared with Tencent,$Alibaba (BABA.US)$/$BABA-W (09988.HK)$Alibaba is facing some short-term challenges:The core e-commerce business is being weighed down by weak macro consumption and industry competition. The market expects its Customer Management Revenue (CMR) growth to slow to 1%-3% (from 10% in the previous quarter), dragging on overall profits.

But in the darkness, the brightest light is undoubtedly Alibaba Cloud. Driven by explosive AI demand,Alibaba Cloud's revenue growth this quarter is expected to surge to 35%-38%, becoming the group’s strongest growth engine.Institutions like JPMorgan regard it as 'China’s best AI enabler,' with the core logic lying precisely in this.

Another key card Alibaba holds in the AI arena is the enterprise-focused 'Qwen' large model and the newly launched 'Wukong' platform. Just before the earnings release, Alibaba has unleashed a series of strategic moves.👇

On March 16, Alibaba announced the establishment of the Alibaba Token Hub (ATH) business group, directly overseen by CEO Eddie Wu, forming a new organization with the core goal of 'creating tokens, distributing tokens, and applying tokens.'

On March 17, Alibaba unveiled its first enterprise-grade AI-native work platform—'Wukong.' This standalone application will be directly integrated into DingTalk, used by over 20 million enterprise organizations. Its Agent can natively operate over a thousand DingTalk capabilities rather than simulating human clicks on graphical interfaces, achieving 'communication as execution.'

The market quickly responded to these developments.Morgan Stanley released a quick note, explicitly pointing out that the financial drivers behind the ATH business group are highly similar to $MINIMAX-W (00100.HK)$、$KNOWLEDGE ATLAS (02513.HK)$pure model companies, and it is expected to become an independent valuation component outside the existing Sum-of-the-Parts (SOTP) framework.The bank named Alibaba as its top pick in China's internet sector, referring to it as 'China’s AI winner with a top-tier complete AI technology stack.'

However, a bright outlook comes with real operational pressures.While the market is focused on the 35% growth of its cloud business, the EBITA margin remains around 9%. Is this 'burning cash for market share,' or is it creating healthy profits? Additionally, the company’s commitment to over RMB 380 billion in capital expenditures over the next three years raises questions about how it will balance investments in loss-making businesses like e-commerce and instant retail—this is another focal point when evaluating its performance.If Alibaba Cloud’s growth continues to exceed expectations, and if its enterprise-grade AI agents open up new possibilities, then after all negative factors have been priced in, a reversal rally could also be worth anticipating.

On one side, Tencent leverages its social and content ecosystem, infusing AI like blood into the veins of its massive enterprise; on the other side, Alibaba mobilizes its full-stack self-developed technology and cloud service infrastructure, launching strategic offensives in key battlegrounds.After the earnings release, whose applause from the capital markets will be more enthusiastic?

[Prize Activity]

🏆 Event One: Big Rally Competition 🎯

Tencent VS Alibaba! Choose the stock you think will have the highest increase on the first day after the earnings announcement. Fellow investors who predict correctly will share30,000 points!

🏆 Activity Two: Speak Your Mind 🎯

Which logic do you value more?Will Tencent leverage its 'social + AI' ecosystem advantage to make AI applications explode faster, thereby gaining a valuation reevaluation? Or will Alibaba focus on the broad track of 'cloud + AI,' making firm investments and welcoming the end of negative news during the layout period?

Share your insights in the comment section—write over 30 words with sound reasoning to earn 66 points!

Note: Both Activity One and Activity Two will end at 16:00 Beijing time on March 18th. The statistics for Tencent and Alibaba's gains are primarily based on their Hong Kong stocks. If both close lower on the first day after earnings in Activity One, all voting fellow investors will equally share the points. Rewards from activities can be stacked, and rewards will be distributed uniformly after this earnings season ends.

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Ask Futubull AI: Both Tencent and Alibaba are pushing hard on their AI strategies. What data should we focus on in this earnings report to assess the substantial progress of each company’s AI commercialization?

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