Bernstein Says Tencent and Alibaba Stocks Are Its Top AI Plays in China

TLDR

• Bernstein named Tencent, Alibaba, NetEase and Boss Zhipin as its preferred China internet stocks, citing AI progress despite weak consumer demand.
• The firm says the market undervalues Tencent’s AI work, including Workbuddy and Hy4.
• Bernstein cut its Alibaba price target but kept an Outperform rating, and expects Alicloud growth to beat forecasts.
• Alibaba’s latest quarter showed revenue of $39.64 billion, up 8.6%, but earnings per share missed estimates.
• Tencent is reportedly negotiating to buy SuperPlay for up to $1.5 billion.

---

Bernstein has named its preferred names in China’s internet sector. The research firm says these companies are building up their artificial intelligence abilities even as consumer demand stays weak.

Bernstein called the sector frustrating because of those consumer headwinds. Still, it sees AI as a source of returns for the firms it favors.

Tencent and Alibaba in Focus

Bernstein believes the market is undervaluing Tencent’s AI projects, including Workbuddy and Hy4. The firm sees option value in personal agents, which are AI tools that act on a user’s behalf.

Tencent is already earning AI returns through its advertising and gaming businesses, according to the firm. Bernstein said this happens even with scrutiny over Tencent’s chatbot work. It still sees a positive risk-reward profile for the stock.

Tencent is also reportedly in talks to buy mobile gaming studio SuperPlay for up to $1.5 billion. It bought $200 million of Bilibili’s convertible senior notes as well. The company also launched a mobile payment app, TenPayGo, for international visitors.

Bernstein expects Alicloud growth to keep beating expectations. The firm recently cut its Alibaba price target but kept its Outperform rating. It says Alibaba can still earn good returns on its spending, despite investor worries about a $10.2 billion share sale.

Bernstein had earlier pointed to AI potential after Alibaba released Qwen3-Max-Thinking. The firm said investors may want proof that agentic AI can lift gross merchandise value and marketing revenue.

Alibaba’s leaders have been buying shares. Founder Jack Ma bought more than HK$600 million in stock. Chairman Joe Tsai also added to his stake earlier this year.

Alibaba Group Holding Limited, BABA

Beyond the two giants, Bernstein also likes online jobs portal Boss Zhipin and game developer NetEase. It cited their “idiosyncratic” business drivers.

Other analysts have weighed in on Alibaba too. Erste Group Bank raised its FY2028 earnings estimate to $8.42 per share from $8.41. The current full-year consensus is $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. Nomura cut its target from $207 to $178.

MarketBeat data shows a “Moderate Buy” consensus and an average price target of $182.89. Two analysts rate the stock Strong Buy, thirteen rate it Buy and six rate it Hold.

Alibaba last reported earnings on August 14. Earnings per share were $1.26, missing the $1.94 estimate. Revenue was $39.64 billion, ahead of the $39.52 billion forecast.

Alibaba shares opened at $110.64 on Tuesday. The stock has 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.