Morgan Stanley China Internet and AI Foundation Models: Catalyst Preview — Where Next?
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Morgan Stanley maps upcoming catalysts for China internet platforms (BATM) and foundation-model developers such as MiniMax and Zhipu AI over Q4 2026 through Q2 2027, maintaining an Attractive view on China internet and other services. Key events include Tencent's WeChat AI agent launch in Q4 2026, expected to deliver significant upside surprise, and its Global Digital Ecosystem Conference on October 29, 2026, spotlighting AI agents and products such as Workbuddy and CodeBuddy. Tencent's Hy4 foundation model should launch officially in Q4 2026, roughly three months after the preview version, with significant performance gains, while the domestic launch of its game The Hidden Ones is set for December 2026 with pre-registrations above 30 million. Alibaba's Qwen 4.0 model, due in Q4 2026, has state-of-the-art potential, and a potential spin-off of its T-Head unit in Q2 2027 could unlock sum-of-the-parts value. NBS September online retail sales data arrive on October 19, 2026. Ratings: Alibaba (BABA.N) Overweight, price US$105.70; Tencent (0700.HK) Overweight, HK$411.40; Meituan (3690.HK) Overweight, HK$69.40; PDD (PDD.O) Overweight, US$78.26; Baidu (BIDU.O) Underweight, US$83.92.
Key exhibits
Exhibit 1
