Goldman Sachs: The performance of large Chinese internet stocks in the first quarter is expected to be mixed, maintaining cloud computing and data centers as the preferred choices.

Goldman Sachs Group, Inc. released a research report stating that the upcoming first quarter performance of China's internet giants (TENCENT(00700) and BABA-W(09988) to be announced on Wednesday) is expected to be mixed. The bank predicts that the main features include: 1) stable revenue growth, with cloud revenue growth becoming a highlight; 2) AI-driven token popularity may increase artificial intelligence capital expenditure; 3) benefiting from the valuation of investments in AI model companies at market prices, which will bring significant non-cash investment income under accounting standards (GAAP/IFRS); 4) internet giants turning to AI, bringing pressure on basic profit margins, but partly offset by the rapid improvement in the efficiency of fast commerce/delivery business units. Looking ahead to the second quarter and the second half of the year, the bank expects profit growth on trading platforms to accelerate again, combined with positive signs from large US companies, creating a more favorable environment. Goldman Sachs Group, Inc. maintains its sector preference, with "cloud computing and data centers" as its top choice (including Alibaba, GDS Holdings Ltd. Sponsored ADR Class A(GDS.US), VNET Group, Inc. Sponsored ADR(VNET.US) and KINGSOFT CLOUD(KC.US)); followed by "e-commerce and mobile travel", and "games and entertainment" as third.