Goldman Sachs: Prefers Gaming and Entertainment in China's Internet Sector Through Year-End; Cuts Target Prices for TENCENT (00700) and BABA-W (09988)

Goldman Sachs Group, Inc. released a research report stating that it has updated its preferences for China's internet and AI sub-sectors through year-end, upgrading gaming and entertainment to the top defensive growth pick, followed by cloud and data centers, as well as vertical/education, as weak macroeconomic trends continue to weigh on e-commerce. TENCENT (00700), NTES (NTES.US), BABA-W (09988), VNET Group, Inc. Sponsored ADR (VNET.US), New Oriental Education & Technology Group, Inc. Sponsored ADR (EDU.US), KE Holdings, Inc. Sponsored ADR Class A (BEKE.US), JD.com, Inc. Sponsored ADR Class A (JD.US), and MiniMax-W (00100) are rated "Buy," benefiting from resilient AI cloud momentum, cost efficiency, and attractive valuations. The report stated that, factoring in elevated AI investment and recent equity financing, the bank lowered its 12-month target price for Tencent to HK$650 and cut its earnings per share forecast for the second half of 2026 by up to 5%; it also lowered the 12-month target price for Alibaba Group Holding Limited Sponsored ADR to HK$172, and cut the U.S. share target price for Alibaba (BABA.US) to US$177 to reflect dilution, while raising its September quarter cloud growth estimate to 53% based on strong computing power demand.