Seedance 2.5 emerged as the most notable commercialization highlight at ByteDance's FORCE AI Cloud Conference

Overview

This report summarizes key releases from ByteDance's Volcano Engine at the FORCE AI Cloud Conference. The conference focused on the AI video generation tool Seedance 2.5 and the foundational model series Doubao Seed 2.1. Nomura's core view is that industry competition is shifting from generic LLM narratives toward more commercializable business applications, especially video generation and AI coding.

Core views

Seedance 2.5 is the clearest commercialization highlight from the conference, as its video length, image quality, multi-reference control, and local editing capabilities are closer to enterprise content production needs. In AI coding, although Doubao Seed 2.1 has enhanced agentic capabilities, ByteDance remains in a catch-up position, and the industry upgrade cycle may compress from the previous 5-6 months to 1-2 months. Nomura also believes Alibaba has a more complete presence across key links including AI chips, CPU/GPU cloud infrastructure, the Bailian large model marketplace, and Qwen models.

Analysis framework

Based on management comments at the conference, feedback from industry contacts, and comparisons of product capabilities, the report evaluates ByteDance's competitive position in video generation, AI coding, and the MaaS market, and compares it horizontally with Alibaba's AI cloud ecosystem.

Methodology notes

• Industry competition analysisComparison of AI commercialization scenarios

  Assess platform competitiveness through two scenarios that are closer to scaled commercialization: video generation and AI coding.

  The report argues that compared with many LLM subsegments that still require incubation, video generation and AI coding are closer to monetization, making them key near-term investment areas for platforms such as ByteDance and Alibaba.

• Product capability analysisEnterprise-grade usability of video generation

  Measure production-grade capability of video models by generation length, image quality, multi-reference assets, local editing, and fit with commercial scenarios.

  Seedance 2.5's 30-second native generation, 4K output, up to 50 multimodal reference assets, and controllable editing are viewed as key steps in moving from experimental UGC toward commercial video production.

• Relative valuationAlibaba sum-of-the-parts valuation and target price

  Value Alibaba's China e-commerce, cloud business, and non-core assets separately to derive the target price.

  The disclosure section shows that Nomura values Alibaba's China e-commerce business at 5x FY27F P/E for USD89bn, AliCloud at 7x FY28F P/S for USD270bn, and non-core assets at a net valuation of USD40bn, resulting in a target price of USD178.

Asset mapping & comparison

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

• ByteDance / Volcano Engine

  Core company and cloud business platform of this conference

  Strengths

  Seedance 2.5 strengthens enterprise-grade production capability through longer video generation, 4K quality, multi-reference control, and controllable editing; management says its share in China's public cloud MaaS market is close to 50%.

  Weaknesses

  The Doubao Seed foundational model still has limited appeal to enterprise users, and the company has not yet entered the top tier in AI coding.

  Comparison

  Performs better in video generation than most business-oriented AI products; in AI coding it lags competitors such as GLM-5.2, Deepseek, and Alibaba.

  Risks

  Faster product upgrade cycles, intensifying competition, chip supply constraints, and weaker-than-expected enterprise adoption.

• Alibaba

  The report's main comparable AI cloud company and investment-view subject

  Strengths

  Covers AI chips via T-Head, CPU/GPU cloud infrastructure, the Bailian LLM marketplace, and Qwen LLMs, giving it a more complete AI cloud value chain.

  Weaknesses

  June-quarter e-commerce CMR may fall short of expectations in the near term.

  Comparison

  Nomura views Alibaba as more of a comprehensive AI cloud player than ByteDance.

  Risks

  Weaker-than-expected e-commerce revenue, margin pressure from increased investment, and regulatory risks in payments and internet finance.

• TikTok Shop merchants

  A potential application scenario for Seedance 2.5

  Strengths

  Can generate product display videos with multilingual and localized styles, reducing cross-border creative production costs and improving content supply efficiency.

  Weaknesses

  Actual conversion-rate improvement still requires commercial validation.

  Comparison

  Compared with traditional manual creative production, AI video generation may be more scalable and lower cost.

  Risks

  There is uncertainty around localization quality, platform policies, ad effectiveness, and merchant adoption speed.

Key data

• Conference dates2026-06-23 to 2026-06-24Volcano Engine held the two-day FORCE AI Cloud Conference.
• Seedance 2.5 release timingExpected in early July 2026The report says the upcoming Seedance 2.5 drew the most attention.
• Video generation lengthUp to 30 seconds of native single-video generationManagement said comparable models in the market generally support 15-20 seconds of direct output, while the current version generates 15 seconds each time.
• Video quality4KSeedance 2.5 is described as upgrading video quality to 4K.
• Multi-reference capabilityUp to 50 multimodal reference assetsUsed to maintain consistency across characters, products, scenes, and styles.
• China public cloud MaaS market shareClose to 50%According to ByteDance management; industry contacts believe more than half of MaaS revenue may be driven by Seedance 2.0.
• Doubao AI chatbot DAUOver 150mnQuestMobile data indicates the free version has already exceeded 150 million daily active users.
• AI coding product upgrade cycleMay compress to 1-2 monthsThe market expects competition to intensify; previously the upgrade cycle was about 5-6 months.
• Alibaba valuation multiple13x CY27F PENomura believes year-to-date share price weakness offers a more attractive entry point for long-term investors.
• Alibaba target priceUSD178Based on a sum-of-the-parts valuation approach.

Impact & implications

For ByteDance, Seedance 2.5 could strengthen its competitive moat in video generation and enterprise content production, while enabling lower-cost, more scalable content supply for advertising, short dramas, e-commerce, and TikTok Shop cross-border merchants. For the industry, AI platforms may concentrate resources on business application battlegrounds such as video generation and AI coding, which could temporarily ease competitive pressure in consumer AI chatbots. For investors, the report views Alibaba as a more complete AI cloud name, while also warning that near-term e-commerce CMR may come in below expectations.

Risks

• If Doubao Seed 2.1 fails to meaningfully improve model performance, ByteDance may continue to lag in AI coding and the enterprise foundational model market.
• Escalating competition in AI coding could compress product iteration cycles to 1-2 months, increasing R&D and compute pressure.
• Chip supply constraints may force AI platforms to make resource trade-offs between business applications and consumer applications.
• The commercialization effect of Seedance 2.5 still depends on enterprise adoption, content consistency, cost efficiency, and actual conversion rates.
• Alibaba-related risks include margin pressure from increased investment, regulatory risks in payments and internet finance, and the possibility that June-quarter e-commerce CMR comes in below expectations.

What to watch

• The actual product experience, pricing, and enterprise customer adoption after the early-July launch of Seedance 2.5.
• Whether Seedance 2.5 can deliver measurable content-production efficiency gains in short dramas, advertising, short-video e-commerce, and among TikTok Shop cross-border merchants.
• Whether the Doubao Seed 2.1 series can improve enterprise-user traction and narrow the gap with GLM-5.2, Deepseek, and Alibaba.
• Whether the contribution mix of Seedance and Doubao Seed within China's public cloud MaaS revenue changes.
• Whether the AI coding upgrade cycle shortens to 1-2 months as the market expects.
• Alibaba's June-quarter e-commerce CMR performance and the growth and commercialization progress of its AI cloud business.