Morgan Stanley says AI "amplifies winners rather than resetting the landscape": Douyin and Taobao Tmall gain share, Tencent and Meituan benefit from transaction closed loops.

Morgan Stanley recently released its sixth AlphaWise China Advertiser Survey report, indicating that AI advertising first changes the budget share landscape, and only afterward expands the overall total addressable market (TAM). AI will further widen the gap in advertising budget share across platforms, pushing leading platforms deeper into commercial workflows and unlocking greater commercialization growth space. Key overweight (OW) names: Alibaba, Tencent, Meituan. Morgan Stanley noted in the report that as AI applications continue to deepen, capital reallocation takes priority over market size expansion. 72% of AI users will reallocate existing advertising budgets; 74% reported that platform ad spending concentration has further increased. AI widens the gap between platforms rather than reshaping the industry landscape. Douyin and Taobao/Tmall achieved the largest share gains; Tencent and Meituan benefited from product capability integration and transaction closed-loop ecosystems. The bank estimates that by 2030, the measurable total scale of AI commercialization will reach RMB 291 billion; by 2040, candidate-set advertising will reach RMB 319 billion, and AI-attributed commission revenue could reach RMB 1.24 trillion. The bank proposes two major development phases: a profit transition phase by 2030 and an industry maturity phase by 2040. By 2030, industry value will mainly come from improved advertising monetization efficiency, budget reallocation, and migration toward high-intent search and intelligent agent traffic scenarios, with total AI commercialization reaching RMB 291 billion. By 2040, as intelligent agent workflows and closed-loop attribution mechanisms mature, the bank estimates AI-mediated advertising revenue of RMB 319 billion and AI-attributed transaction commissions of RMB 1.24 trillion; after excluding cannibalization effects on traditional businesses and partner revenue sharing, the actual net incremental market size will be somewhat lower. The key to determining value capture is commercial control, not merely model technology leadership. Platforms monetize AI revenue through three paths: 1. Predictive AI improves the monetization efficiency of existing traffic; platforms that can translate model-matching advantages into higher advertiser ROI can capture higher budgets. 2. Candidate-set traffic layer upgrade: commercial activity shifts toward high-value search and intelligent agent scenarios (e.g., WeChat Search, Kuaishou Search, the upcoming WeChat AI agent, and standalone AI applications). Standalone AI and embedded AI can capture user entry points; content platforms can convert user attention into consumption intent; transaction platforms can expand upstream into the user discovery phase. 3. Transaction layer upgrade, building merchant operating systems to capture commission revenue and recurring merchant workflow-related revenue; favorable to platforms with settlement capabilities and performance data. Morgan Stanley believes that AI amplifies platforms' existing advantages rather than resetting the competitive landscape. Douyin and Taobao/Tmall are the most structurally certain share beneficiaries; WeChat has sufficient risk resilience while also having growth space from product integration; Meituan benefits from the commercial logic of transaction closed loops. Kuaishou and Baidu still have recovery opportunities.