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Equity & Macro Commentary, Technology Investing
Tencent is probably the most interesting megacap now, with accelerating growth at 12x earnings and decent returns on capex. It arguably has the best global internet ecosystem; the better comparison is not Meta but Apple's services business as a standalone with 100% market share. A low multiple reflects Chinese stocks being unwanted, not the business. x.com x.comÂ
Tencent is an underrated way to play AI agents. Meta's Muse, an agent that sends emails, compares prices and books flights, topped the US App Store with 2.5M downloads in two weeks. WeChat's Xiaowei follows almost the same product logic, but WeChat has a social graph, mini-programs and payments, a moat Meta lacks. The business model is unproven: Muse's free tier allows 100M tokens a week, heavy users cost $20-40, and closing the commercial loop may be harder than the technology. x.comÂ
Tencent offers strong downside protection plus several sources of upside. Net of cash and investee stakes it trades at about a 9.5% free-cash-flow yield, and $21.6B net cash, $80.6B of listed stakes and about $50B of unlisted ones cover roughly 20% of its $506B market cap with no long-term debt. It dominates Chinese social media, gaming and music. Upside comes from conservative AI gains in ads and cloud, buybacks management says target an undervalued stock, and convergence to US peer multiples. … Show more
Alibaba and Tencent offer exposure to China's versions of Microsoft's AI Foundry and Amazon's Bedrock. Alibaba's Bailian/Model Studio has nearly every piece of that flywheel: Model Studio customers grew 8x YoY in the March 2026 quarter, AI cloud revenue has grown triple digits for 11 straight quarters, and AI is 30% of external cloud revenue. Its ~10% cloud EBITDA margin trails AWS and Microsoft's ~40% but should rise once its land grab locks in clients. Tencent's offering is similar. x.comÂ
Tencent's AI push is delivering, with total calls to its Hunyuan Hy3 model up more than 68x from Hy2, and a week after launch Hy3 ranked first on OpenRouter's global model usage leaderboard. That supports the case for WeChat's agent, which calls mini-program APIs directly across 1.38 billion monthly users and is more likely to earn from merchants paying for AI traffic and tools than from consumer subscriptions. x.comÂ
If DeepSeek V4 runs well on Huawei's Ascend chips, China's own AI stack wins, and with it Alibaba, Baidu, Tencent, SMIC, Samsung and SK hynix. Alibaba and Baidu have placed Ascend 950PR orders, and cheaper inference means more deployments and cloud revenue. Tencent is a confirmed 950PR customer. SMIC is the only Chinese foundry able to make Ascend chips. Teardowns show Samsung and SK hynix HBM in Ascend, which Huawei cannot yet replace. Watch the V4 benchmarks. x.com x.comÂ
Tencent owns one of the best closed loops from intent to identity to payment to fulfillment, yet trades as if AI agents will bypass it. Weixin combines 1.44 billion users with chat, payments, Mini Programs and merchant reach, so its Xiaowei agent can hand work to services that already know the user, a distribution and return advantage. About $75 billion of cash and $128 billion of investments against a $491 billion market cap leave the operating business near 7x roughly $40 billion of earnings. … Show more
Alibaba and Baidu stand to benefit because China will not slow its AI development even if the US slows its own. x.comÂ
Alibaba and Baidu are a no-brainer buy because Chinese AI stocks trade at very low valuations while China is determined to race the US in AI. x.comÂ
Alibaba is the cleanest public-market bet that Chinese AI labs are innovating rather than just distilling, and that cheaper models drive more usage. If China is innovating, Qwen drives Alibaba Cloud share; if Jevons paradox holds, Alibaba captures the spend across models, compute, data, chips and apps. AI products are already 30% of Alibaba Cloud's external revenue, above a $5B run rate, and the commerce cash engine can carry it through the capex/revenue mismatch. x.comÂ
China's entry into chip design and fabrication is a structural change: stop fading China as Western AI chip and cloud leaders get steeply discounted. China dominates nearly every manufacturing category; with multi-patterning its DUV tools perform near newer nodes and could scale massively or reach EUV. Chinese open models co-designed for Chinese chips could pull sovereignty-minded countries onto its tech stack. As Ford fared after China joined the WTO, so may Nvidia, ASML, TSMC and AWS by 2050. … Show more