Navigating China Internet and AI Models

This report reassesses five key investor debates in the China AI landscape, highlighting a preference for Cloud & Data Center sub-sectors and specific AI model companies like MiniMax.

Key Takeaways

• 1.China is forecast to reach 350 trillion daily tokens by year-end 2026, driven by proliferation in token demand and agentic AI.
• 2.Cloud & Data Centers remain the top preferred sub-sector for 2H26, despite a soft 1Q, due to price hikes and capex ramp-ups.
• 3.Investment preference shifts toward large/SMIDs as mega-caps navigate valuation contraction and AI investment cycles.

Table of Contents

• US vs. China AI models: Performance gap and pricing
• Chinese AI model competition: Framework and competitive landscape
• Token growth drivers: Enterprise or Consumer AI, and can ROI be justified?
• Hyperscaler margins/capex: Will China hyperscalers catch up?
• Consumer AI agents: Agentic AI form factors and agent-to-agent disruptions
• China Internet views by sub-sectors
• A recap of our views on the mega-caps & other key ideas
• 1Q results recap; key numbers & outlook by sub-sectors
• Top apps tracker: Latest time-spent trends at a glance

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