To The Moon

According to a research report released by Daiwa, the AI Token price index has declined by approximately 25% since the bank first initiated coverage in August. The multi-region average blended list prices of OpenAI and Anthropic have dropped by about 31% and 47% respectively, potentially redistributing value across the AI industry chain.

The bank expects that the AI Token price war will slow down the annualized recurring revenue (ARR) growth of model companies in the short term. At the current stage, it favors companies with secured contracts on hand and exposure to Infrastructure-as-a-Service (IaaS) businesses. In the long term, it is bullish on the application and distribution segments becoming beneficiaries of low-cost intelligence capabilities.

Daiwa pointed out that the significant decline in Token prices mainly reflects the increase in lower-priced model tiers and improved inference efficiency. However, the shift of workloads toward lower-cost models will reduce revenue per Token achieved, requiring a substantial increase in usage volume to offset. The bank believes that recent price cuts may offset a considerable portion of the revenue increment brought by short-term usage growth.

In addition, U.S. AI suppliers are gradually narrowing the pricing advantage that Chinese models previously held, while raising the threshold for model capabilities. Currently, Chinese models on average remain price-competitive, but no longer firmly hold a cost-performance advantage.

In terms of stock selection, Daiwa favors Alibaba Group Holding Ltd (09988), Tencent Holdings Ltd (00700), Kingsoft Cloud Holdings Ltd (03896), Zhipu (02513), and MiniMax-W (00100) in that order, all rated "Buy." The bank is optimistic about Alibaba's combination of cloud business, self-developed chips, and model business, as well as Tencent's development through agentic AI products, complemented by its broad distribution channels and cloud business.