GS TMT International Weekly Update

This report covers the recent ~30% decline in Alibaba shares due to competitive pressures and analyzes the potential impact of WeChat's AI agent on Tencent's operating margins. It also highlights diverging margin loan dynamics in the Korean and Taiwanese equity markets.

Key Takeaways

• 1.Alibaba shares have declined ~30% in 5 weeks, driven by competitive pressures in cloud and AI, and concerns over increased capital expenditure requirements.
• 2.Tencent's new AI agent integration in WeChat may drive incremental inference costs equivalent to 5-17% of 4Q26E adjusted operating profit.
• 3.Margin loan stress is more pronounced in Korea compared to Taiwan, where Taiwan's system-wide coverage remains stable.

Table of Contents

• Recent BABA Underperformance – What Gives?
• BABA Significant Underperformance since mid-May (vs HSTECH/SE/CPNG/TCEHY)...
• Tencent WeChat Agent Implications: Estimating Potential Inference Costs...
• GIR Analysis: Weixin agent daily token consumption and implied inference cost as % of Tencent's 4Q26E adj. operating profit (base/bull/bear)
• Korea / TW Margin Charts

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