JD Beats! Can Tencent & Alibaba Post Higher Profit?
$JD-SW(09618)$ releases Q1 earnings and jumped 4%.
Its revenue and profit beat expectations, core retail profitability improved, new businesses including food delivery grow by 18.1%
Revenue: RMB 301.1 billion, a year-on-year increase of 15.8%
Operating Profit: RMB 10.5 billion (approx. USD 1.5 billion), compared to RMB 7.7 billion in the same period last year
Adjusted EBITDA: RMB 13.7 billion, up 27% YoY, exceeding the forecast of RMB 12.64 billion
$TENCENT(00700)$ and $BABA-W(09988)$ are scheduled to announce their financial results today and tomorrow, respectively. The report forecasts Tencent Group’s Q1 revenue to grow 10% YoY, and group EBIT to grow 16%. Alibaba’s e-commerce management revenue is expected to rise by 9% YoY, and group EBIT by 12%.
AI will be a key focus area for both tech giants.
According to Goldman Sachs, AI will be a critical growth driver for China’s internet sector in the coming years. Especially in areas such as cloud computing, advertising technology, and local life services, AI applications will create new growth opportunities.
The report also notes that AI-related capital expenditures will be a major variable this year. While total spending is expected to remain elevated across all quarters, the growth rate may decelerate due to supply chain constraints and geopolitical uncertainties.
Tencent: Ad Revenue and AI Integration in the Spotlight
Tencent will report its Q1 earnings on May 14.
Goldman Sachs forecasts:
Game revenue to grow 15% YoY; Advertising revenue to grow 18% YoY; Adjusted group EBIT to reach RMB 67.8 billion (up 16% YoY); EPS for FY2025 is projected to grow 14%, above the market consensus of 11%
Investor focus areas include:
AI-driven advertising technology upgrades and AI application progress: Emphasis on new ad inventory within the WeChat ecosystem (such as AI search ads) and improvements in click-through rates of existing ad formats
Sustainability of gaming revenue growth: Monitoring launches of new titles like Valorant and revitalization of legacy games
Alibaba: Cloud Business and E-commerce Competition Under Scrutiny
Alibaba will report its Q4 FY2024 earnings on May 15.
Goldman Sachs expects:
Single-digit growth in GMV; Taobao-Tmall management revenue to grow by 9%; Taobao-Tmall EBITA to reach RMB 39 billion (up 1% YoY); Group EBITA to reach RMB 26.8 billion (up 12% YoY)
Keypoints to focus about earnings:
Alibaba Cloud’s capital expenditure and Cloud profit margin outlook: Driven by increasing AI inference demand, alongside challenges from foreign chip restrictions; Balancing increased AI-related depreciation against rising revenue from AI training and inference services
E-commerce competitive landscape and Taobao-Tmall EBITA margin outlook: Impacts on Taobao-Tmall’s fee outlook, particularly after one year of implementing the software service fee in September 2025
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