Tianfeng Securities: Continuous Progress in the AI Sector, Game Valuations Expected to Recover, Leading Media Companies' Value Highlights

Tianfeng Securities Research Report states that in AI, the iteration speed of large models is accelerating, and the deployment of AI hardware and content is speeding up. We are optimistic about the AI market for the whole year. Currently, AI has shifted from the technological competition of 2023-2025 to the battle for the entrance to super applications in 2026. It is important to focus on major internet companies (ByteDance, Alibaba, Tencent) and core targets within their ecosystems. Throughout the year, AI will cross three lines: 1) large models & major company applications; 2) revival of authoritative media; 3) AI + gaming.

In gaming, performance and AI are driving the market together. We expect a concentrated release of earnings in March-April, combined with AI industry growth, to bring a double increase in EPS and P/E ratios.

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Tianfeng Media | AI Sector Continues to Advance, Gaming Valuation Recovery Expected, Media Leaders’ Value Highlights

We are optimistic about the AI market for the whole year. Currently, AI has shifted from the technological competition of 2023-2025 to the battle for the entrance to super applications in 2026. It is important to focus on major internet companies (ByteDance, Alibaba, Tencent) and core targets within their ecosystems.

Market View

Last week (Feb 23-27), the Media (Shenwan) Index declined by 5.10%, while the CSI 300 Index rose by 1.08%. The sector underperformed the CSI 300 by 6.18%, ranking 31st among all sectors. In Hong Kong stocks, the Hang Seng Tech Index fell by 1.41%.

We are optimistic about the AI market for the whole year. Currently, AI has shifted from the technological competition of 2023-2025 to the battle for the entrance to super applications in 2026. It is important to focus on major internet companies (ByteDance, Alibaba, Tencent) and core targets within their ecosystems. Throughout the year, AI will cross three lines: 1) large models & major company applications; 2) revival of authoritative media; 3) AI + gaming.

Investment Recommendations

AI: The iteration speed of large models is accelerating, and deployment of AI hardware and content is speeding up. On the model side, Deepseek-v4 is expected to go live soon, with significant upgrades in native multimodal and Agent capabilities, optimized for domestic chips, improving software-hardware synergy. On the application side, Tomato has started testing AI real-person interactive dramas, accelerating multimodal interaction capabilities in content scenarios; Qianwen Project will launch its first AI glasses at MWC 2026, with major companies extending from model competition to AI entrance and hardware ecosystem. We emphasize that technological advances in large models and the competition for AI application entrances are the main themes for the year. We are optimistic about breakthroughs in Agent and multimodal directions. Relevant targets include: 1) large models & major company applications; 2) IP & multimodal applications; 3) revival of authoritative media; 4) AI + gaming.

Gaming: Performance and AI are driving the market together. We expect a concentrated release of earnings in March-April, combined with AI industry growth, to bring a double increase in EPS and P/E ratios.

Risk Warning: Media, education, and internet policies are tightening again; some companies may underperform expectations; user consumption recovery may fall short of expectations. The “related targets” mentioned in the report are only a list of relevant companies and do not constitute any investment advice.**

(Source: First Financial)