Goldman Sachs Names 5 Top China Internet Stocks Ahead of Q3 Earnings

TLDR

• Goldman Sachs named Tencent, Alibaba, PDD Holdings, Meituan and JD.com ahead of third-quarter earnings.
• The bank expects combined net profit at major Chinese internet firms to rise about 9%.
• It forecasts 53% cloud growth at Alibaba and 104% profit growth at Meituan.
• Goldman favors gaming firms as more defensive than e-commerce and advertising.
• JD.com reports November 17, Tencent November 18 and Alibaba November 19.

Goldman Sachs has named five Chinese internet stocks to watch before third-quarter earnings. The list includes Tencent, Alibaba, PDD Holdings, Meituan and JD.com. The report was published on November 10, according to Investing.com.

The bank expects combined net profit at major Chinese internet companies to rise about 9% from a year earlier, according to AAStocks. That would follow profit declines in the two previous quarters. The figures are forecasts, not reported results.

Goldman also favors gaming and entertainment companies. It views them as more defensive than e-commerce, advertising and local services. Chinese consumer spending remains weak, and the bank expects profits to improve as companies focus more on efficiency and artificial intelligence.

Meituan Profit Forecast Points to a 104% Jump

Goldman expects Meituan’s third-quarter adjusted operating profit to rise 104% from a year earlier. That would take it to about 700 million yuan.

Meituan, MPNGY

The bank says profits could improve across food delivery, hotels and local services. Meituan is also expanding abroad with its Keeta delivery platform and building AI-powered services. Goldman lists both as areas that could add to growth.

PDD Holdings Has Strong Cash but Faces Earnings Pressure

PDD Holdings owns Pinduoduo and the shopping platform Temu. Goldman points to its large net cash position and strong free cash flow.

The bank says better advertising income and returns on ad spending at Temu could help profits. It also names the company’s Xin Pin Mu initiative as an area of investment.

Still, Goldman expects near-term earnings pressure as PDD spends on expansion and platform development. It lists intense e-commerce competition and weaker Chinese consumption as risks.

JD.com Forecast Shows 39% Profit Growth

Goldman forecasts that JD.com’s group net profit will grow 39% to about 8 billion yuan. It cites stronger retail profitability and improving cash generation.

The bank also points to international expansion through Joybuy and opportunities in AI-powered commerce. JD.com will report third-quarter results on November 17.

Tencent Gaming and Ad Revenue Expected to Grow

Goldman expects Tencent’s third-quarter gaming revenue to grow 8%. It forecasts a 19% rise in advertising revenue. Gaming revenue has stayed resilient, and advertising demand is growing.

The bank also sees opportunity in Tencent’s cloud computing business and its WorkBuddy enterprise AI agent. Goldman kept its 12-month price target at HK$650.

However, it lowered the valuation multiple for the gaming unit from 20 times to 19 times earnings. Tencent is due to report results on November 18.

Alibaba Cloud Growth Forecast at 53%

Goldman forecasts that Alibaba’s cloud revenue growth could accelerate to 53%. It expects cloud operating margins to improve to about 12.5%. Alibaba is expanding its cloud computing and artificial intelligence operations.

The bank expects adjusted earnings before interest, taxes and amortization to rise 238% from a year earlier to about 31 billion yuan. Better food-delivery economics could help, though competition and heavy investment spending remain challenges.

Alibaba’s Qwen AI models could also lift demand for cloud services. The company will report September-quarter results on November 19.

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