Bernstein is watching these two Chinese internet stocks amid growing AI interest

Investing.com reports that Bernstein is closely monitoring two Chinese internet stocks amid expanding interest in artificial intelligence. The investment firm has identified companies within China's internet sector that are advancing their AI capabilities, despite ongoing consumer challenges in the region. Bernstein's analysis centers on how these internet giants are leveraging AI technology to generate returns, even as the broader sector faces difficulties due to weak consumer sentiment in China's economy.

Tencent stands out in Bernstein's view as the market appears to be undervaluing the company's AI projects, such as the Workbuddy and Hy4 platforms. The firm anticipates substantial option value in the development of personal agents. While Tencent is experiencing scrutiny over its chatbot development, Bernstein maintains that the company still presents a positive risk-reward profile for investors. Notably, there are talks of Tencent acquiring mobile gaming studio SuperPlay for up to $1.5 billion.

Additionally, Bernstein has subscribed to $200 million of Bilibili’s convertible senior notes and launched a new mobile payment app, TenPayGo, designed for international visitors. The firm anticipates Alibaba's cloud growth to continue outperforming expectations. Despite Bernstein cutting its price target on Alibaba, the firm retained its Outperform rating, highlighting the potential for good returns on Alibaba's investments, despite investor concerns over the company's $10.2 billion share sale.

Alibaba's leadership has been actively investing in the company, with founder Jack Ma purchasing over HK$600 million in shares and Chairman Joe Tsai acquiring a significant stake earlier this year. In addition to Tencent and Alibaba, Bernstein also favors online jobs portal Boss Zhipin and videogame developer NetEase, citing their unique business drivers.