PDD Holdings reported Q1 revenue of RMB 106.2 billion—has its share price already hit bottom?
🎁Is AI investment squeezing profits or driving growth? Tencent, Alibaba, and JD.com release their results this week— who will outperform in this earnings season?
This week marks the start of a new earnings season for Chinese tech stocks. On May 12,$JD-SW (09618.HK)$the first report card was handed in, followed by May 13,$TENCENT (00700.HK)$and$BABA-W (09988.HK)$with two giants going head-to-head on the same day!From the fierce competition in AI large model development to the battle over food delivery subsidies, from the rapid advancement in cloud services to the close combat in instant retail, these three giants collectively account for over 20% of the Hang Seng Tech Index's weighting. Meanwhile,$Hang Seng TECH Index (800700.HK)$after rebounding to above 5,100 points, it is now consolidating within a narrow range, quietly awaiting significant earnings catalysts for a breakout.
This catalyst likely lies at the heart of this round of earnings: The peak period of heavy AI spending has arrived, with capital expenditures visibly eroding short-term profit statements.The market no longer blindly chases revenue growth but instead asks— how much revenue has AI actually generated?Who can find a convincing balance between 'squeezing profits' and 'driving volume growth'?![[Clap]This week marks the start of a new earnings season for Chinese tech stocks. On May 12,$JD-SW (09618.HK)$the first report card was handed in, followed by May 13,$TENCENT (00700.HK)$and$BABA-W (09988.HK)$with two giants going head-to-head on the same day! From the fierce competition in AI large model development to the battle over food delivery subsidies, from the rapid advancement in cloud services to the close combat in instant retail, these three giants collectively account for over 20% of the Hang Seng Tech Index's weighting. Meanwhile,$Hang Seng TECH Index (800700.HK)$after rebounding to above 5,100 points, it is now consolidating within a narrow range, quietly awaiting significant earnings catalysts for a breakout.[Keep Fighting] [Thinking Face]This catalyst likely lies at the heart of this round of earnings: The peak period of heavy AI spending has arrived, with capital expenditures visibly eroding short-term profit statements.The market no longer blindly chases revenue growth but instead asks— how much revenue has AI actually generated?Who can find a convincing balance between 'squeezing profits' and 'driving volume growth'? Tencent: Core business stability supports AI investment, market focuses on profit tolerance testing According to Bloomberg's consolidated forecast:$TENCENT (00700.HK)$Q1 expected revenue is 199.337 billion yuan, a year-on-year increase of 10.73%; expected adjusted net profit is 67.654 billion yuan, up 10.31% year-on-year. Looking at the different business segments, Tencent’s core fundamentals remain strong >> Value-added services (gaming): Expected to remain...](https://nnqimage.futunn.com/sns_client_feed/999982/20260511/web-1778493238934-ZBDq80fEcM.jpeg/big?area=2&is_public=true&imageMogr2/ignore-error/1/format/webp)
Tencent: Core business stability supports AI investment, market focuses on profit tolerance testing
According to Bloomberg's consolidated forecast:$TENCENT (00700.HK)$Q1 expected revenue is 199.337 billion yuan, a year-on-year increase of 10.73%; expected adjusted net profit is 67.654 billion yuan, up 10.31% year-on-year.
Looking at the different business segments, Tencent’s core fundamentals remain strong >>
Value-added services (gaming): Expected to be the growth cornerstone, with multiple institutions forecasting year-over-year revenue growth of approximately 12.9% to 13%. Domestic evergreen games perform steadily, while new releases like 'Delta Force' and 'Kingdom of Loathing Mobile' contribute incremental growth.
Online advertising: Expected to be the biggest highlight this quarter, with growth likely reaching around 18%. The main driver of growth is the continued scaling of video account ads and enhanced monetization capabilities from AI-driven improvements in ad matching efficiency.
Fintech and enterprise services: Cloud business growth is accelerating due to increased AI computing power demand and consecutive price hikes. Morgan Stanley predicts that corporate service revenue growth could increase from 22% in Q4 last year to 25%.
AI remains the biggest narrative variable in this earnings report and the most conflicted contradiction in the market.On one hand, Tencent’s AI strategy is advancing intensively:In April, a preview version of HunYuan 3.0 was open-sourced, improving inference efficiency by 40% compared to HunYuan 2.0 and reducing input/output costs by more than 50%. However, management has made it clearthat investment in new AI products in 2026 will be no less than 36 billion yuan (double that of 2025). The market is concerned whether the surge in R&D and capital expenditures (Capex) will significantly erode profit margins.
CLSA acknowledges that while steady revenue growth should hold in Q1, AI investments are creating core pressure on profit margins for 2026. Some argue that Tencent's strong gaming and advertising cash flows can sufficiently support its AI investments, suggesting market concerns over profit margin pressures may be overstated. This 'duality' reflects in the stock price, forming the recent consolidation pattern.
The post-earnings trend will depend on whether Tencent can clearly answer a key question: When will the substantial financial returns from the heavy AI investments materialize by 2026?Any positive guidance regarding the commercialization of the HunYuan large model or the monetization path of WeChat intelligent agents (Agents) could break the current equilibrium and drive a valuation reassessment.Alibaba: Navigating through profit pains to build a bottom, with cloud and AI supporting the mid-to-long term narrative
If Tencent's story is about strong fundamentals digesting high capital expenditures,then Alibaba is in the midst of a more intense profit restructuring cycle.
The market expects Alibaba’s Q4 revenue for the fiscal year ending March to be RMB 246.507 billion, representing a year-on-year growth of 4.25%, with an anticipated adjusted net profit of RMB 15.082 billion, down approximately 49% year-on-year.However, the sharp decline in profits does not indicate 'fundamental deterioration', but rather the result of Alibaba proactively 'spending for the future', i.e., shifting investments from food delivery towards AI.
Looking at the sources of profit suppression, this quarter’s adjusted EBITA plummeted by approximately RMB 33 billion, primarily due to the triple squeeze brought on by heavy investment: around RMB 5 billion in red packet subsidies for promoting Qwen, RMB 5 billion added to AI model R&D and commercialization, and roughly RMB 18 billion in losses from high-intensity subsidies such as flash sales.
How ‘bad’ these earnings are in terms of profit isn’t surprising; the key question is what this investment has bought them.
In the AI cloud business, Alibaba Cloud is approaching a qualitative change point in its valuation logic.Benefiting from explosive demand for global large model training and enterprise-level AI deployment, multiple institutions predict cloud business revenue growth could reach 40%, accelerating from the previous quarter’s 36%.
Just before the earnings release, a major announcement:On May 11, Qwen and Taobao announced full integration, marking the first deep binding between the world's largest e-commerce platform and a top-tier large model application. The core focus is on replacing traditional search with AI-driven conversational shopping.In addition,The market also anticipates that management will provide the latest guidance on the potential spin-off and listing of the chip business 'Pingtouge'.The key point of this strategy lies in the scaled production of self-developed GPUs to support AI computing power demands.
The market's pricing logic for Alibabais increasingly decoupling from the profit performance of a single quarter and shifting towards a vote on the mid-to-long-term strategy.The focus is on Taotian Group’s outlook and margin pressure, the slope of narrowing losses in its instant delivery strategy, the revenue growth of Alibaba Cloud versus capital expenditure expansion, and how the company implements its full-stack AI strategy.If management releases three key signals during the earnings call—ongoing improvement in cloud business profitability, a clear roadmap for reducing loss scale, and a definitive timeline for monetizing AI commercialization—the market’s revaluation logic for Alibaba may face a critical test.
The focus is on Taotian Group’s outlook and margin pressure, the slope of narrowing losses in its instant delivery strategy, the revenue growth of Alibaba Cloud versus capital expenditure expansion, and how the company implements its full-stack AI strategy.If management releases three key signals during the earnings call—ongoing improvement in cloud business profitability, a clear roadmap for reducing loss scale, and a definitive timeline for monetizing AI commercialization—the market’s revaluation logic for Alibaba may face a critical test.![[Clap]This week marks the start of a new earnings season for Chinese tech stocks. On May 12,$JD-SW (09618.HK)$the first report card was handed in, followed by May 13,$TENCENT (00700.HK)$and$BABA-W (09988.HK)$with two giants going head-to-head on the same day! From the fierce competition in AI large model development to the battle over food delivery subsidies, from the rapid advancement in cloud services to the close combat in instant retail, these three giants collectively account for over 20% of the Hang Seng Tech Index's weighting. Meanwhile,$Hang Seng TECH Index (800700.HK)$after rebounding to above 5,100 points, it is now consolidating within a narrow range, quietly awaiting significant earnings catalysts for a breakout.[Keep Fighting] [Thinking Face]This catalyst likely lies at the heart of this round of earnings: The peak period of heavy AI spending has arrived, with capital expenditures visibly eroding short-term profit statements.The market no longer blindly chases revenue growth but instead asks— how much revenue has AI actually generated?Who can find a convincing balance between 'squeezing profits' and 'driving volume growth'? Tencent: Core business stability supports AI investment, market focuses on profit tolerance testing According to Bloomberg's consolidated forecast:$TENCENT (00700.HK)$Q1 expected revenue is 199.337 billion yuan, a year-on-year increase of 10.73%; expected adjusted net profit is 67.654 billion yuan, up 10.31% year-on-year. Looking at the different business segments, Tencent’s core fundamentals remain strong >> Value-added services (gaming): Expected to remain...](https://nnqimage.futunn.com/sns_client_feed/999982/20260511/web-1778494879957-TXqVW2CHhp.jpeg/big?area=2&is_public=true&imageMogr2/ignore-error/1/format/webp)
JD.com: Impact from the reduction in national subsidies has been priced in; narrowing losses in food delivery becomes the biggest highlight.
JD.com faces quarterly results expectations described as ‘pressure with a glimmer of hope’.According to broker forecasts, JD.com’s adjusted net profit in Q1 fell by as much as 56% year-on-year, primarily due to high base pressure in electronics sales caused by the reduction in national subsidies (CLSA expects electronics sales to drop by about 10% year-on-year) and continued investment losses in its food delivery business.However, sequentially, there are signs of improvement in profitability.(Guosen Securities predicts that Q1 Non-GAAP net margin improved by 1.4 percentage points quarter-on-quarter), suggesting that ‘the worst may be over.’
The reduction in losses from food delivery is the most noteworthy marginal improvement in this earnings report.Brokerages generally expect the losses from new businesses like food delivery to narrow by over 3 billion yuan quarter-on-quarter, mainly due to easing competition, optimized subsidy allocation, and increased commission revenue.The market is currently focused on whether the reduction in food delivery losses can continue to outperform expectations, if there will be a clear turning point in battery-powered product categories in the second half of the year, and whether the high-frequency synergy between instant retail and daily goods can be further strengthened.If management signals the above, JD.com could initiate a valuation recovery rally driven by confirmation of its profitability bottom. As for AI, JD.com is currently more focused on the penetration of efficiency tools in 'AI + e-commerce,' which isn't the core pricing factor in the short term.
AI investment has moved from the 'storytelling' phase to the 'earnings-focused' phase, with companies possessing clear commercialization paths receiving higher valuation premiums.Fellow investors, after reviewing these three companies, who would you place your trust in? Which company's performance do you expect to be the strongest?
Fellow investors, after reviewing these three companies, who would you place your trust in? Which company's performance do you expect to be the strongest?[Reward Activity] Double benefits stacked, earn points effortlessly🏆 Activity One: Big Gain Showdown
Choose the stock you think will have the highest increase on the first day after earnings release. Fellow investors who predict correctly will share the rewards.30,000 points!
🏆 Activity Two: Speak Your Mind
Tencent vs. Alibaba vs. JD.com! What’s your take on the earnings expectations of these three?
Share your insights in the comment section—write over 30 words with sound reasoning to earn 66 points!Note: Both Event One and Event Two will end at 21:30 Beijing Time on May 12; the statistics for the increases in Tencent, Alibaba, and JD.com are primarily based on their Hong Kong shares. In Event One, if the closing prices of all three stocks fall on the first day after earnings, all participating fellow investors will share the points equally; event rewards can be stacked; the list of winners will be announced and rewards distributed after the current earnings season concludes.
Upcoming earnings reports from star tech stocks—how to deploy strategies effortlessly? 'Earnings Express' powered by Futubull AI identifies key insights, helping you build an options strategy in three steps >>![[Clap]This week marks the start of a new earnings season for Chinese tech stocks. On May 12,$JD-SW (09618.HK)$the first report card was handed in, followed by May 13,$TENCENT (00700.HK)$and$BABA-W (09988.HK)$with two giants going head-to-head on the same day! From the fierce competition in AI large model development to the battle over food delivery subsidies, from the rapid advancement in cloud services to the close combat in instant retail, these three giants collectively account for over 20% of the Hang Seng Tech Index's weighting. Meanwhile,$Hang Seng TECH Index (800700.HK)$after rebounding to above 5,100 points, it is now consolidating within a narrow range, quietly awaiting significant earnings catalysts for a breakout.[Keep Fighting] [Thinking Face]This catalyst likely lies at the heart of this round of earnings: The peak period of heavy AI spending has arrived, with capital expenditures visibly eroding short-term profit statements.The market no longer blindly chases revenue growth but instead asks— how much revenue has AI actually generated?Who can find a convincing balance between 'squeezing profits' and 'driving volume growth'? Tencent: Core business stability supports AI investment, market focuses on profit tolerance testing According to Bloomberg's consolidated forecast:$TENCENT (00700.HK)$Q1 expected revenue is 199.337 billion yuan, a year-on-year increase of 10.73%; expected adjusted net profit is 67.654 billion yuan, up 10.31% year-on-year. Looking at the different business segments, Tencent’s core fundamentals remain strong >> Value-added services (gaming): Expected to remain...](https://nnqimage.futunn.com/sns_client_feed/999982/20260511/web-1778495345067-xBSnEKA0R6.png/big?area=2&is_public=true&imageMogr2/ignore-error/1/format/webp)
![[Clap]This week marks the start of a new earnings season for Chinese tech stocks. On May 12,$JD-SW (09618.HK)$the first report card was handed in, followed by May 13,$TENCENT (00700.HK)$and$BABA-W (09988.HK)$with two giants going head-to-head on the same day! From the fierce competition in AI large model development to the battle over food delivery subsidies, from the rapid advancement in cloud services to the close combat in instant retail, these three giants collectively account for over 20% of the Hang Seng Tech Index's weighting. Meanwhile,$Hang Seng TECH Index (800700.HK)$after rebounding to above 5,100 points, it is now consolidating within a narrow range, quietly awaiting significant earnings catalysts for a breakout.[Keep Fighting] [Thinking Face]This catalyst likely lies at the heart of this round of earnings: The peak period of heavy AI spending has arrived, with capital expenditures visibly eroding short-term profit statements.The market no longer blindly chases revenue growth but instead asks— how much revenue has AI actually generated?Who can find a convincing balance between 'squeezing profits' and 'driving volume growth'? Tencent: Core business stability supports AI investment, market focuses on profit tolerance testing According to Bloomberg's consolidated forecast:$TENCENT (00700.HK)$Q1 expected revenue is 199.337 billion yuan, a year-on-year increase of 10.73%; expected adjusted net profit is 67.654 billion yuan, up 10.31% year-on-year. Looking at the different business segments, Tencent’s core fundamentals remain strong >> Value-added services (gaming): Expected to remain...](https://nnqimage.futunn.com/sns_client_feed/999982/20260511/web-1778495378030-roEpz8Luth.jpeg/big?area=2&is_public=true&imageMogr2/ignore-error/1/format/webp)
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