Bernstein has named Tencent, Alibaba, NetEase and online jobs portal Boss Zhipin as its preferred stocks in China's internet sector, arguing that the companies are steadily building out their artificial intelligence capabilities even as consumer demand remains weak. The research firm described the sector as frustrating because of those consumer headwinds, but it still views AI as a source of returns for the names it favors. The picks cut across gaming, e-commerce and cloud, and recruitment — several of the major business lines in China's internet economy — with Bernstein's AI thesis serving as the common thread.

Market Undervalues Tencent's AI Work, Bernstein Says

The firm believes the market is underestimating Tencent's AI projects, including Workbuddy and Hy4, and sees option value in personal agents — AI tools that act on a user's behalf. According to Bernstein, Tencent is already generating AI-driven returns through its advertising and gaming businesses, even amid scrutiny of the company's chatbot work. The firm maintains a positive risk-reward profile on the stock. Because advertising and gaming are core parts of Tencent's business, that argument ties the firm's AI thesis to results investors can track each quarter rather than to distant product promises.

Separately, Tencent is reportedly in talks to acquire mobile gaming studio SuperPlay for as much as $1.5 billion. The company has also purchased $200 million of Bilibili's convertible senior notes and launched TenPayGo, a mobile payment app aimed at international visitors. Taken together, the moves sketch a company deploying capital across gaming, video and payments while its AI buildout continues.

Bernstein Cuts Alibaba Price Target, Keeps Outperform Rating

On Alibaba, Bernstein expects Alicloud growth to continue beating expectations. The firm recently lowered its price target on the stock but maintained an Outperform rating, saying Alibaba can still earn solid returns on its spending despite investor concerns over a $10.2 billion share sale.

Bernstein had earlier highlighted Alibaba AI potential after the company released Qwen3-Max-Thinking, though the firm noted investors may want proof that agentic AI can lift gross merchandise value and marketing revenue — a proof point that upcoming quarterly reports can be measured against.

Alibaba's leadership has been buying shares as well. Founder Jack Ma purchased more than HK$600 million worth of stock, while Chairman Joe Tsai added to his stake earlier this year.

Broader Picks and Analyst Views

Beyond the two giants, Bernstein also favors online jobs portal Boss Zhipin and game developer NetEase, citing their “idiosyncratic” business drivers. Boss Zhipin operates one of China's largest online recruitment platforms, while NetEase ranks among the country's biggest game publishers.

Other analysts have weighed in on Alibaba, too. Erste Group Bank raised its FY2028 earnings estimate to $8.42 per share from $8.41, while the current full-year consensus stands at $5.89 per share. Citigroup lifted its price target from $190 to $193 with a buy rating, Jefferies kept a buy rating and a $192 target, and Nomura cut its target from $207 to $178. The spread between those targets — $15 from highest to lowest — captures the range of professional opinion on the stock's near-term prospects.

MarketBeat data shows a “Moderate Buy” consensus on Alibaba Group Holding Limited (BABA), with an average price target of $182.89. Two analysts rate the stock Strong Buy, thirteen rate it Buy and six rate it Hold.

Latest Earnings and Share Performance

Alibaba last reported earnings on August 14. Earnings per share came in at $1.26, missing the $1.94 estimate, while revenue of $39.64 billion, up 8.6%, came in ahead of the $39.52 billion forecast. The mix of a revenue beat and an earnings miss keeps attention on the question Bernstein addressed directly: whether Alibaba's spending continues to earn solid returns.

Alibaba shares opened at $110.64 on Tuesday, and the stock has traded in a one-year range of $91.99 to $182.50. NetEase closed at $123.73 on October 14 and traded higher at $125.11 in premarket activity. Alibaba's next earnings report will offer a fresh reading on Alicloud momentum and on whether agentic AI is lifting gross merchandise value and marketing revenue — the proof point Bernstein says investors are waiting for.