Securities: AI deeply integrates the game industry chain, the industry fundamentals and valuations of 26 years are expected to usher in a double hit.

East Money Information Securities released a research report stating that according to official data from GDC, in 2026, GDC attracted approximately 30,000 participants from around the world, with over 1,000 speakers and over 400 global technology and gaming companies participating. Discussions related to AI were particularly popular, with AI no longer being just a "vision of the future," but deeply integrated into various aspects of game development. As global AI development has entered the application phase in the second half, looking towards 2026, with the penetration of AI in the game industry chain, the gaming industry is expected to see multiple catalytic factors such as supply, policy, technology, and channels, leading to a potential double boost in industry fundamentals and valuations. Key points from East Money Information Securities include: Positive outlook on the gaming industry chain in 2026 1) Supply recovery: The trend of regular issue of game licenses is becoming clearer, with improvements in both quantity and pace, significantly alleviating industry supply constraints. Combined with key companies gradually launching reserved products, the gaming market is expected to usher in a new era of content supply. 2) Policy support: Continued support from the policy level in the directions of digital economy, cultural consumption, and technological innovation is beneficial for the gaming industry, which holds significant value as an industry with both technological and cultural export attributes. 3) Technological catalyst: AI is becoming an important variable in a new round of productivity revolution in the game industry, with its catalytic effect evident not only at the tool level but also in the native experience layer. 4) Channel transformation: There is an expectation for a future reduction in fees for Google Play and App Store channels. If related policies or changes in platform ecology drive optimization in revenue sharing proportions, it will directly improve the profit distribution structure of gaming companies, offering a substantial boost to profit margins. Positive view on investment opportunities in the gaming industry chain under the catalysis of AI In the upstream, "AI+IP, AI+engine" is expected to reduce content development costs, shorten incubation periods, and enhance material generation, NPC interaction, and underlying tools ability. This is favorable for companies with IP reserves and technical platform capabilities, such as CHINA LIT (00772), IReader Technology (603533.SH), COL Group Co., Ltd. (300364.SZ), Unity Software (U.US), among others. In the middle, "AI+PGC, AI+UGC, AI+distribution" are the most direct beneficiaries. AI can significantly improve efficiency in artistic assets, plot scripts, code assistance, testing optimization, and lower the threshold for UGC creation, driving an expansion in content supply. On the distribution end, AI can improve ROI through user segmentation, LTV prediction, material generation, and optimization of placements. Recommendations for companies to watch include Tencent (00700), NTES-S (09999), 37 Interactive Entertainment Network Technology Group (002555.SZ), XD INC (02400), Kingnet Network (002517.SZ), Zhejiang Century Huatong Group (002602.SZ), Giant Network Group (002558.SZ), G-bits Network Technology (603444.SH), Beijing Ultrapower Software (300002.SZ), Perfect World (002624.SZ), Shenzhen Bingchuan Network (300533.SZ), IGG (00799), ARCHOSAUR GAMES (09990), FRIENDTIMES (06820), BAIOO (02100), Roblox (RBLX.US), among others. In the downstream, "AI+channel marketing, AI+user acquisition platform" will further improve customer acquisition efficiency, conversion rates, and retention performance. Companies to watch include Applovin (APP.US), MOBVISTA (01860), Unity, KUAISHOU-W (01024), BILIBILI-W (09626), HUYA, Inc. Sponsored ADR Class A (HUYA.US), JOYY, Inc. Sponsored ADR Class A (YY.US), among others. Risk factors Failure to meet expectations in AI technology iteration and product implementation could affect IP development, content production, and game development efficiency. Regulatory and compliance risks related to AI governance and content ownership, data security, protection of minors, algorithm governance, and stricter content reviews could increase operational costs for platforms and companies. Additionally, risks related to commercial transformation should not be ignored. While AI can enhance user acquisition, marketing, and user engagement efficiency, if user willingness to pay, advertising demand, or conversion effects are lower than expected, it could impact revenue realization. Competition in the game content industry may intensify if leading companies increase investment and smaller companies fail to keep up, or if there are changes in platform traffic distribution mechanisms, which could lead to fluctuations in market positioning and profitability. It is also important to be cautious of macroeconomic fluctuations, changes in licensing pacing, and the performance of key products falling below expectations, which could disturb industry sentiment.