ByteDance and TAL drive scale-up in AI education software and hardware; structural divergence in the sector continues

Overview

This report is Goldman Sachs' April 2026 update on China education tracking data, covering AI education apps, AI learning tablets, mobile user engagement, offline tutoring licenses, overseas study trends, and East Buy. The key conclusion is that AI education software and hardware continue to scale up led by ByteDance and TAL, but traditional offline tutoring capacity, overseas study-related demand, and some e-commerce education assets still face total addressable market pressure.

Core views

The sector shows clear internal divergence. Positive momentum is concentrated in AI-native education apps, TAL learning tablet growth, and Xueersi.com user growth; pressure mainly comes from continued contraction in the number of non-subject offline tutoring institutions, a decline in subject-based institutions, and weakening student visa data from Australia and Canada. Goldman Sachs maintains TAL as the only Buy-rated name in its China education coverage, believing its AI hardware, online user growth, and profit improvement execution stand out; it also keeps EDU and GOTU at Neutral, and East Buy and Offcn Education at Sell.

Analysis framework

The report is mainly based on monthly tracking data, cross-checked against app DAU/MAU, GMV and ASP on major e-commerce platforms, tutoring license counts, overseas student visa issuance, Douyin channel GMV, and company valuation frameworks. TAL is valued using SOTP, while East Buy and GOTU use target P/E or segment valuation, supplemented by Goldman Sachs' risk and methodology disclosures.

Methodology notes

• 估值SOTP

  Sum-of-the-parts valuation

  TAL's 12-month target price of US$15.2 is based on Goldman Sachs' SOTP framework, including 13x target EV/NOPAT for high school tutoring, 19x target EV/NOPAT for quality education and other businesses, 16x target EV/NOPAT for content solutions, net cash after deducting deferred revenue, and a 10% holding-company discount.

• 估值目标P/E

  Price-to-earnings multiple method

  East Buy's target price is based on a 15x target P/E for FY27E EPS, and GOTU's target price is based on a 15x target P/E for 2027E non-GAAP net profit.

• 因子分析GS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor comparison

  Goldman Sachs factor profiling compares individual stocks with the market and peers across growth, financial returns, valuation multiples, and composite percentiles to supplement investment context judgments.

• 事件框架M&A Rank

  M&A probability ranking

  Goldman Sachs uses a 1-to-3 M&A Rank to assess the likelihood that covered companies become takeover targets, with 1 indicating high probability, 2 medium probability, and 3 low probability.

• 数据工具Quantum

  Goldman Sachs proprietary financial database

  Quantum provides access to historical financial statements, forecasts, and ratios, supporting single-company deep dives as well as cross-industry and cross-market comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TAL EDUCATION GROUP (TAL.US)

  Core coverage name; Goldman Sachs' only Buy-rated China education stock

  Strengths

  Xueersi.com MAU growth accelerated, learning tablet GMV increased YoY, the YoY decline in ASP narrowed and recovered MoM for four consecutive months, and Xueersi Smart MAU grew strongly YoY.

  Weaknesses

  April learning tablet GMV and shipments declined MoM, and offline capacity expansion and new-product cadence may still affect quarterly performance.

  Comparison

  Among EDU, GOTU, East Buy, and Offcn, TAL has the most positive rating in Goldman Sachs' coverage.

  Risks

  Offline capacity expansion falls short of expectations, education regulation changes, smart learning tablet new-product performance misses expectations, and overseas business exploration challenges.

• ByteDance / Doubao Study / Gauth

  An important external reference for the scaling of AI education apps

  Strengths

  Doubao Study DAU grew +128% YoY, and Gauth's overseas features and billings continued to grow.

  Weaknesses

  The report does not provide complete profitability or long-term retention data.

  Comparison

  Doubao Study ranked No. 6 in China in AI-native app DAU rankings.

  Risks

  Monetization in overseas markets, product retention, and competitive intensity in AI education may affect sustained growth.

• East Buy (1797.HK)

  The sell-rated name and livestream e-commerce asset within China education coverage

  Strengths

  Douyin GMV grew +42% YoY, new platform GMV grew +180% YoY, and app MAU grew +42% YoY.

  Weaknesses

  GMV declined 10% MoM, average daily views on the main channel fell YoY and MoM, and the share of 1P self-owned brand GMV fell to 28%.

  Comparison

  Goldman Sachs rates East Buy Sell, weaker than TAL's Buy rating.

  Risks

  GMV growth below expectations, slow ramp-up of new channels, and weaker-than-expected progress in private-traffic and self-owned-brand products.

• New Oriental Education & Technology (EDU/9901.HK)

  A Neutral-rated name within China education coverage

  Strengths

  It still has value from its traditional business, new businesses, and East Buy stake, and it holds a relatively large net cash balance.

  Weaknesses

  Core revenue growth remains weak, and further disruption to overseas study demand is a downside risk.

  Comparison

  Rated below TAL and above East Buy and Offcn.

  Risks

  Weak overseas study demand, education regulation changes, management changes, and East Buy volatility.

• Gaotu Techedu (GOTU)

  A Neutral-rated name within China education coverage

  Strengths

  The valuation is based on 2027E non-GAAP net profit, and it has optionality in adult education and offline expansion.

  Weaknesses

  Customer acquisition efficiency, offline expansion, and execution of new tutoring formats remain uncertain.

  Comparison

  Goldman Sachs rates it Neutral, less positive than TAL.

  Risks

  Education regulation changes, declining customer acquisition efficiency, inability to attract and retain star teachers, and slower adult-education growth.

• China AI learning tablet market

  An important product category for TAL's growth

  Strengths

  MAU of major brands grew +47% YoY, and penetration rose from about 6% a year earlier to about 9%.

  Weaknesses

  April combined GMV of major brands turned negative YoY and fell sharply MoM, with clear brand divergence.

  Comparison

  Yuanfudao and TAL posted positive YoY growth, while Xiaodu, BBK, Zuoyebang, and iFlytek declined YoY.

  Risks

  E-commerce promotion cadence, new-product cycles, ASP pressure, and intensifying competition may cause monthly volatility.

• Overseas study services chain

  A potential demand source for EDU and other education companies

  Strengths

  It remains part of the business mix of traditional education companies.

  Weaknesses

  Student visas issued to Chinese students by Australia and Canada fell YoY in Jan-Feb 2026.

  Comparison

  Compared with AI education software and hardware, overseas study demand is more of a headwind.

  Risks

  Visa policies, destination-country enrollment policies, and changes in macro willingness to study abroad.

Key data

• Doubao Study DAU growth+128% yoyAs of the end of April, it remained the No. 6 AI-native app in China.
• Gauth monthly billingsabout US$1.0mn, +35% yoyLTM billings were US$12.9mn, and Gauth Atlas and Southeast Asia AI Live Tutor features were launched.
• Gauth monthly billings / average DAUUS$0.35, +49% yoyThe April growth rate was higher than the +28% yoy in March.
• Xueersi.com MAU growth+22% yoyApril growth accelerated from +15% / +10% in Feb/Mar.
• Peiyou-related app MAU growth+19% yoyThis slowed from +26% yoy in March.
• GMV of major learning-device brands-2% yoy / -47% momOverall performance on major platforms such as Douyin, Taobao, Tmall, and JD weakened in April.
• TAL learning tablet GMVabout Rmb192mn, +20% yoy / -42% momAbout 48,000 units were sold in April, with shipments at +27% yoy / -46% mom.
• TAL learning tablet ASPabout Rmb4.0k, -6% yoy / +6% momThe YoY decline narrowed, and the figure rose MoM for four consecutive months.
• MAU of major education device brandsabout 16.2mn, +47% yoy / -6% momEquivalent to about 9% of China's K-9 student population, up from about 6% a year earlier.
• Xueersi Smart MAUabout 3.4mn, +117% yoy / -5% momUser engagement in TAL's learning-device ecosystem remains strong.
• Non-subject tutoring institutions117.6k, -0.2% momThe number continued to decline MoM in April.
• Subject tutoring institutions9,024, -0.4% momThis was mainly dragged down by the decline in non-profit subject tutoring institutions for grades 1-9.
• Australia and Canada student visas-6% yoyIn Jan-Feb 2026, visas issued to Chinese students fell, with Australia down 5% and Canada down 9%.
• East Buy Douyin GMVRmb958mn, +42% yoy / -10% momNew platform GMV grew +180% yoy, while GMV on the existing three platforms grew +7%.
• East Buy app MAU+42% yoy / -1% momApril YoY growth continued, but MoM eased slightly.

Impact & implications

In investment terms, AI education is extending from simple application traffic growth to paid hardware and learning-scenario penetration. TAL's learning tablets, Xueersi.com, and smart learning apps are relatively strong, supporting its sole Buy rating within coverage. At the same time, continued reductions in offline tutoring licenses, weaker overseas study visas, and month-on-month pullbacks in some livestream e-commerce channels indicate that the industry's recovery is uneven, and valuation depends more on each company's product iteration, customer acquisition efficiency, and profit execution.

Risks

• Offline learning center expansion falls short of expectations.
• Education industry regulatory policy changes.
• Smart learning tablet launches or sales underperform expectations.
• Overseas business exploration faces challenges.
• Overseas study demand is further disrupted.
• Customer acquisition efficiency declines or teacher supply is insufficient.
• East Buy's new-channel ramp-up and private-brand expansion fall short of expectations.
• Monthly GMV and MAU data are heavily affected by promotion cadence, seasonality, and statistical methodology.

What to watch

• Whether TAL learning tablet GMV in May and for the quarter can sustain YoY growth above Goldman Sachs' expectations.
• Whether MAU growth for Xueersi.com, Peiyou, and Xueersi Smart can hold up.
• DAU, paid conversion, and overseas monetization trends for Doubao Study and Gauth in AI education scenarios.
• Whether the number of non-subject and subject tutoring licenses continues to shrink.
• Changes in visa data for Chinese students in Australia, Canada, the United States, and the United Kingdom.
• Whether East Buy's new-platform GMV growth can offset the slowdown on legacy platforms.
• Education regulation policy and the approval pace for offline capacity expansion.