The tech and internet sectors will exhibit significant sub-sector divergence between 2H25 and 2026, China Merchants Securities said in its research report.
The "Magnificent Seven" and tech hardware are benefiting from long-term demand for AI infrastructure and robust AI capital expenditure, showing strong performance. On the other hand, global consumer SaaS is experiencing simultaneous weakness, with different companies facing various bottom-up issues.
China Merchants Securities remains optimistic about AI leaders, suggesting that investors should seek selective opportunities in the consumer SaaS sector after significant pullbacks.
Chinese companies, such as Pinduoduo (PDD.US), NTES-S (09999.HK) (NTES.US), BOSS ZHIPIN-W (02076.HK), and TME-SW (01698.HK) (TME.US), have demonstrated solid growth, profitability, and valuation support.
The broker recommended overweighting Alphabet (GOOG.US), Meta (META.US), Netflix (NFLX.US), Roblox (RBLX.US), Pinduoduo, NTES-S, BOSS ZHIPIN-W, and TME-SW.
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AAStocks Financial News
Web Site: www.aastocks.com
| SG Top Picks |
| Stock & Type |
Code |
Strike(Call Level) |
Last |
Effective Gearing |
| NTES (C) |
19491 |
300.199 (-) |
0.041 |
7.6 X |
| NTES (C) |
24954 |
280.2 (-) |
0.103 |
5.6 X |
| NTES (Bull) |
68719 |
193 (195.5) |
0.038 |
11.1 X |
| NTES (Bull) |
65144 |
185 (188) |
0.053 |
8.0 X |
| ALPBE (C) |
10080 |
360 (-) |
0.455 |
5.5 X |
| ALPBE (P) |
10012 |
230 (-) |
0.069 |
6.0 X |
| META (C) |
10003 |
900 (-) |
0.101 |
10.9 X |
| META (P) |
10757 |
700 (-) |
1.010 |
5.4 X |
| NFLX (C) |
10088 |
140 (-) |
0.036 |
5.8 X |
