To The Moon

In the first quarter, Chinese companies delivered an impressive performance, outpacing the broader U.S. market. $Alibaba(BABA)$ surged over 55% in a single quarter. According to the latest filings, Bridgewater Associates significantly increased its holdings in Chinese tech giants, with Alibaba (BABA) and $Baidu(BIDU)$ among its top picks. Following the increase, Bridgewater’s stake in Alibaba is now valued at approximately $750 million.

With $TENCENT(00700)$ and Alibaba releasing their latest earnings, Do these Chinese tech titans truly have a winning strategy in the AI race? And after the earnings results, is it still worth getting on board?

Tencent: AI Advertising Pushes Revenue Above Expectations, with a “Pragmatic” Strategy

Tencent reported Q1 revenue of RMB 180.02 billion, up 13% year-over-year, and non-IFRS operating profit of RMB 69.32 billion, up 18% YoY.

AI is already improving advertising efficiency. Supported by large language models (LLMs), Tencent’s ad platform has significantly improved in recommendation precision and delivery effectiveness. This enhancement boosts ROI for clients across sectors like e-commerce, gaming, and consumer goods.

Tencent also revealed its self-developed “Yuanbao” system, which can orchestrate more than 5 million WeChat mini-programs. It embodies the AI Agent framework: LLM + Tool + Memory, forming a uniquely embedded AI ecosystem.

Q1 CapEx reached RMB 23 billion, up 91% YoY, with full-year CapEx expected to exceed RMB 100 billion.

Tencent’s AI approach emphasizes enhancing existing revenue engines such as ads and games, rather than moonshot innovation — a strategy that appeals to investors looking for tangible short-to-mid-term monetization.

Is it similar to $Meta Platforms, Inc.(META)$’s strategy?

Alibaba: Shifting to “AI Infrastructure,” Betting Big on Cloud + Foundation Models

Alibaba’s Q4 revenue came in at RMB 236.45 billion, slightly below market expectations of RMB 237 billion. However, net profit soared 279% YoY to RMB 12.382 billion, driven by cost reduction and gains in asset valuations.

Alibaba previously announced over RMB 380 billion (approx. $53 billion) in capital expenditure, marking one of the largest private investments in AI and cloud infrastructure in China. The company is moving away from C-end (consumer-facing) metrics like GMV, and instead focusing on a long-term layout across Alibaba Cloud, foundation models (like Tongyi Qianwen), and custom AI chips.

According to Goldman Sachs, 80% of that budget will go toward AI servers, with the remainder focused on general-purpose servers, data centers, and other infrastructure.

While local services and advertising remain in a downturn, the +18% YoY growth in cloud intelligence and the continuous evolution of Tongyi signal that Alibaba is aiming to become a hybrid of AWS and OpenAI in China.

Questions to Consider:

Can Tencent’s “pragmatic AI” strategy of enhancing existing revenue lines outperform Alibaba’s heavy AI infrastructure bets in the next 2–3 years?

Is the market underestimating Alibaba’s long-term transformation into a tech infrastructure giant?

With heavy CapEx commitments from both companies, which stock better balances AI ambition and financial discipline?

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