Highlights of the quarterly reports of Chinese internet giants: How fast is the growth of AI and cloud? How much is the drag from food delivery?

Chinese internet giants are about to announce their second-quarter financial reports, with performance expected to diverge, while AI and takeaway services remain the market's focus.

According to the Chasing Wind Trading Desk, Goldman Sachs analyst Ronald Keung and his team stated in a recent report that they expect the second-quarter financial reports of Chinese internet giants to show a divergent pattern. Due to the drag from e-commerce and local service platforms, overall profits are expected to decline by 10% year-on-year for the first time since the second quarter of 2022, but the accelerated growth of AI cloud services and healthy performance in niche areas like gaming will provide support for some companies.

In terms of individual companies, Goldman Sachs expects Tencent, NetEase, and Didi to maintain robust profit growth, with Tencent's adjusted EBIT growth at 15%, Didi at 32%, and NetEase at 20%. This stands in stark contrast to trading platforms, where Alibaba Group's EBITA is expected to decline by 16%, and Meituan and JD.com's EBIT are expected to drop by 58% and 70%, respectively.

For investors, the key points of focus are concentrated on three main lines: the accelerated revenue growth of AI cloud services, significant profit declines due to takeaway competition, and the responses of various companies to the "anti-involution" policy.

Strong Growth Momentum in AI Cloud Business

Goldman Sachs expects the AI cloud business of Chinese internet giants to achieve significant growth acceleration in the second quarter.

The report predicts that Alibaba Cloud's revenue growth is expected to increase from 18% in the first quarter to 23%, although still lower than Google Cloud's 32% and Microsoft Azure's 39% growth during the same period, it shows a clear upward trend.

This growth is primarily driven by a surge in AI inference demand and the rapid development of AI applications. According to Goldman Sachs' estimates, ByteDance's daily token processing in June reached 15 trillion, while Alibaba's was about 4-5 trillion, indicating a substantial increase in AI inference demand in the first half of 2025.

Goldman Sachs estimates that Google's daily token processing volume has increased from 16 trillion in May to 33 trillion in July, with ByteDance reaching 15 trillion in June and Alibaba around 4-5 trillion, showing rapid growth in AI inference demand.

At this year's World Artificial Intelligence Conference (WAIC), major manufacturers showcased their latest AI advancements. Tencent released the "Hunyuan World 1.0" open-source 3D world generation model, Alibaba launched the "Quark AI Glasses" and upgraded the Qwen model series, and JD.com rebranded its large language model as JoyAI. These technological advancements are expected to translate into actual revenue growth in the second half of the year.

Intense Competition in Takeaway Services Drags Down Platform Profits

The fierce competition in the takeaway market is becoming a major drag on the performance of trading platforms.

As a result, the report predicts that Alibaba Group's EBITA will decline by 16% year-on-year, while Meituan and JD.com's EBIT will drop by 58% and 70%, respectively.

In terms of specific losses, Goldman Sachs estimates that Alibaba's takeaway business lost 11 billion yuan in the June quarter, which will expand to 19 billion yuan in the September quarter; JD.com's takeaway business lost over 10 billion yuan in the second quarter. As the market leader, Meituan's profit per order in its takeaway business for the second, third, and fourth quarters is expected to be adjusted down from 0.8/0.4/0.4 yuan to 0.7/0.2/0.4 yuan The report points out that competition is not limited to traditional takeaway services but has also expanded into the instant shopping sector. According to reports, Alibaba's peak daily order volume for instant shopping has reached 15 million orders, while Meituan's flash purchase has reached 20 million orders. Pinduoduo has also launched instant shopping and instant delivery services, which will further intensify market competition.

Goldman Sachs expects that various e-commerce platforms will continue to acquire new users through takeaway services, especially in the lead-up to the Double Eleven shopping festival in the fourth quarter. In the long term, this may lead to a shift in the takeaway market from the current duopoly of Meituan and Alibaba at a ratio of 7.5:2.5 to a three-way competition of 5.5:3.5:1, with JD.com becoming the third pole.

Performance Divergence Among Major Platforms, Gaming and Mobility Sectors Show Resilience

Against the backdrop of overall profit pressure, the gaming and mobility segments are expected to maintain strong growth, which are also the two sub-sectors Goldman Sachs is most optimistic about.

The report shows that Tencent is expected to deliver solid results, with a revenue growth of 11% in the second quarter and a 15% increase in adjusted EBIT. Its gaming business has performed outstandingly, with daily active users of "Delta Force" exceeding 20 million, surpassing "Peacekeeper Elite" to become Tencent's second-largest domestic game. The mobile version of "Valorant" is set to launch on August 19, with an expected annual revenue of 7 billion RMB.

Alibaba faces greater challenges, with first-quarter revenue expected to grow only 3% (due to the divestiture of RT-Mart and Intime), and adjusted EBITA expected to decline by 16%. However, customer management revenue is expected to maintain a healthy growth of 11%, and cloud business profit margins are expected to improve sequentially to 9%.

Meituan is expected to see a revenue growth of 16% in the second quarter, but adjusted EBIT is expected to plummet by 58%. Although core local lifestyle business revenue maintains a growth of 13%, intensified competition in takeaway services has led to a significant decline in profits.

JD.com is expected to see a revenue growth of 16%, significantly outperforming the overall retail industry, but adjusted EBIT is expected to decline by 70%. JD's retail business profit is expected to grow by 15%, but new business losses exceed 10 billion RMB.

Pinduoduo faces unique challenges, with second-quarter revenue expected to grow by 11%, but adjusted EBIT is expected to decline by 38%. Its fully managed business in the U.S. was paused from May to June and gradually resumed after July, which has had a certain impact on performance.

Didi has maintained growth in a stable market environment, with second-quarter revenue expected to grow by 8% and adjusted EBITA expected to grow by 32%, reflecting the operational leverage effect of the ride-hailing business