Nomura summarizes 10 expert views: AI commercialization, Douyin ecosystem, and cross-border logistics remain the main theme in China internet in the second half

Overview

This report is Nomura China Internet team’s Mid-2026 expert call recap, covering 10 experts from OTA, e-commerce, generative AI, local life, music, logistics, short dramas, and AI animation. It is not a deep dive on a single company, but uses expert perspectives to assess growth, profitability, competition, and regulatory changes across internet verticals and maps some conclusions to related assets or entities such as Meituan, Alibaba, J&T, TME, ByteDance, Moonshot AI, and DeepSeek.

Core views

The core view is that internet platforms are entering a phase that prioritizes profit quality and returns on AI investment. In AI, closed-source flagship models, enterprise workflow integration, domestic AI chip cost reductions, and vertical industry data will become the focus of LLM commercialization. On platform economics, Douyin local life and e-commerce still have scale growth, but redemption rates, macro consumption, and profitability constraints are shifting them from aggressive expansion to more precise operation. In cross-border, TikTok Shop maintains high growth and continues to support J&T. In content, AI music and AI short dramas have acquisition and supply efficiency advantages, but copyright, quality, retention, and ad value dilution are key constraints. In travel, declining passenger flow and changes in airline commission policies create short-term headwinds for OTAs.

Analysis framework

The report uses an expert interview compilation approach, translating first-hand observations from experts across industries into judgments on platform operating metrics, competitive dynamics, cost structure, regulatory pressure, and investable assets, with additional disclosure of Nomura’s existing coverage ratings, target prices, and valuation methodology.

Methodology notes

• Expert interviewsMid-2026 China Internet Insight expert call series

  Covering multiple internet verticals through 10 industry experts to distill operating metrics, competitive dynamics, and commercialization trends.

  This method is suitable for observing industry changes not yet fully reflected in financial statements, such as AI application rollout, platform subsidy strategy, logistics share shifts, and content ecosystem controls, but conclusions depend on expert samples and point-in-time judgment.

• Platform operating analysisGTV/GMV, redemption rate, DAU/MAU, watch time, revenue, and ad monetization

  Assessing internet platform quality using transaction scale, active users, retention, monetization, and cost constraints.

  The report emphasizes that gross GTV or GMV alone does not fully represent true operating quality, such as Douyin local life’s lower redemption rate versus Meituan, making the net GTV gap potentially larger.

• Valuation methodsEV/EBIT, P/E, P/S, and segment valuation

  Using multiple methods and segment-level valuation to set target prices for covered companies.

  The disclosure indicates J&T uses 18x FY26F EV/EBIT to derive a HKD14 target price; Meituan uses segment valuation; Alibaba is valued via China e-commerce, Alibaba Cloud, and non-core assets; TME uses valuation by online music subscription, non-subscription music, and social entertainment segments.

Asset mapping & comparison

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

• Meituan (3690 HK)

  A peer asset for local life competition, including in-store, hotel, and travel businesses

  Strengths

  Experts believe Meituan has a more mature and sophisticated operating framework, including personalized subsidies, membership operations, and cross-scenario conversion capability.

  Weaknesses

  It still faces strong pressure from Douyin local life’s rapid growth in categories such as hotels and travel.

  Comparison

  Douyin 1H26 local life gross GTV was about CNY551bn, while Meituan in-store business was expected to be CNY629bn in the same period; however Meituan’s redemption rate is estimated above 80% versus Douyin’s 57%-58%, making the net GTV advantage potentially more pronounced.

  Risks

  Food delivery and in-store consumption competition intensifies; new business performance falls short of expectations.

• Alibaba Group Holding (BABA US)

  Core platform asset in China e-commerce, cloud, and LLM competition

  Strengths

  A large internet platform with capital, data ecosystem, and a strategic need for SOTA LLMs remains a strong competitor in AI competition.

  Weaknesses

  It requires sustained AI and cloud infrastructure investment, with potential margin pressure from expansionary capex.

  Comparison

  Compared with pure-play AI labs like Moonshot AI, Alibaba’s advantages are in ecosystem, funding, and data, while pure-play AI labs have an advantage in focus.

  Risks

  Profitability could decline from accelerated investment; payment and internet finance regulatory risk may affect core operations and Ant Group valuation.

• J&T Express (1519 HK)

  Main beneficiary of TikTok Shop logistics growth in Southeast Asia

  Strengths

  Deep integration with TikTok Shop gives it high parcel share, fulfillment capability, network coverage, and cost advantage across most Southeast Asian markets.

  Weaknesses

  In Indonesia, it may face greater entry of regional logistics providers due to regulatory scrutiny.

  Comparison

  Experts believe potential regional peers are unlikely to significantly weaken J&T in the short term on scale, service quality, and cost competitiveness.

  Risks

  Intensifying market competition, parcel growth below expectations, slower-than-expected cost optimization, and single-country regulatory risk.

• Tencent Music Entertainment Group (TME US)

  Asset linked to online music and AI music trends

  Strengths

  Music subscription, non-subscription music, and social entertainment segments have a clear valuation framework.

  Weaknesses

  Platforms like Soda Music are attracting younger users through AI-generated content and Douyin traffic distribution, creating competition for user watch time.

  Comparison

  Soda Music has about 50mn DAU and 150mn MAU, but user watch time has fallen from a peak of 60-70 minutes to around 50 minutes, suggesting declining incremental efficiency in traffic conversion.

  Risks

  Loss of music watch time, slower paid-user growth, SVIP penetration below expectations, and stricter monetization regulation for ads and livestreaming.

• ByteDance / Douyin / TikTok Shop

  Core platform for local life, e-commerce, AI infrastructure, cross-border e-commerce, and music content ecosystem

  Strengths

  Douyin local life and e-commerce still have scale growth; TikTok Shop is growing strongly in Southeast Asia and the US, and Doubao with e-commerce agentic commerce has long-term strategic significance.

  Weaknesses

  Local life redemption rate is below Meituan, e-commerce GMV growth is below internal targets, and AI shopping assistants are still early-stage, requiring product catalog understanding, data integration, and supply-chain integration.

  Comparison

  The Douyin platform is shifting focus from pure GTV or GMV expansion to monetization, profitability, and AI infrastructure spending.

  Risks

  Weakening consumption, declining subsidy margin, regulatory changes, uncertain AI ROI, and dilution of content quality and advertising value.

• Moonshot AI

  Chinese generative AI startup and LLM commercialization reference sample

  Strengths

  Experts expect year-end ARR above USD1bn, with strong overseas API usage and AI programming capability, and closed-source flagship models help protect margins.

  Weaknesses

  It needs high-quality proprietary data and vertical scenario capabilities to scale commercialization, while facing competition from major internet platforms.

  Comparison

  Pure-play AI labs may have stronger focus than large platforms, but large platforms have capital, ecosystem and SOTA model strategic investment.

  Risks

  Model price declines, compute cost, insufficient switching barriers for enterprise customers, and vertical scenario commercialization below expectations.

• DeepSeek

  Open-source LLM and inference cost advantage reference sample

  Strengths

  Experts believe DeepSeek has a cost advantage in inference workloads driven by operating efficiency, and it is hard for other providers hosting the same open-source model to replicate.

  Weaknesses

  Open-source does not imply open commercial pathways; commercialization still depends on deployment, workflow embedding, and customer stickiness.

  Comparison

  Base model pricing has been aggressively reduced for customer acquisition, while advanced models retain premium pricing, creating model price tiering.

  Risks

  Commoditization of base models, price wars, and slower enterprise customer conversion than expected.

Key data

• Expert coverage scope10 expertsCovers directions such as OTA, e-commerce, generative AI, local life, AI music, cross-border e-commerce, online healthcare, short dramas, and AI animation.
• Moonshot AI ARR expectationAbove USD1bn by year-endExperts think the main drivers are overseas API usage and AI programming capability.
• Douyin local life 1H26 gross GTVApproximately CNY551bn, up 44% year-on-yearMeituan physical store business GTV was expected to be CNY629bn in the same period, up 11%; Douyin redemption rate was about 57%-58%, while Meituan’s is estimated above 80%.
• Soda Music user baseAround 50mn DAU and 150mn MAUAs of May 2026; DAU is expected to be around 60mn by year-end, up around 50%, a slowdown versus near 100% growth in 2025.
• Douyin e-commerce 618 GMV growthAbout 19% year-on-yearBelow internal 24%-25% targets; experts think a more realistic FY26 GMV growth target is 15%-16%.
• China airlines 1H26 passenger volume375 million passengers, up 1% year-on-year1Q26 grew about 7%, while 2Q26 declined 4%-5%; experts expect a 4% year-on-year decline in July-August peak travel.
• TikTok Shop 1H26 GMVAbout USD35bnSoutheast Asia and the United States were key contributing regions, and 1H26 growth was roughly doubled.
• Hongguo users and revenueFlagship short drama app: 120mn DAU, 330mn MAU; core revenue CNY20bnData for June 2026; core revenue rose about 87% year-on-year, with full-year core revenue expected at CNY42-45bn.
• Share of AI-generated contentBelow 30% of total viewsHongguo controls AI-generated content share through recommendation weighting, compensation adjustments, and stricter content review.

Impact & implications

In investment terms, AI commercialization is shifting from model capability competition to competition in cost, workflow embedding, and vertical scenario data, benefiting leading platforms with capital, data, and ecosystems, while preserving high-growth opportunities for focused AI labs. In internet platforms, Meituan retains an advantage in operating sophistication in local life, while Douyin is moving from scale expansion to profitability; J&T benefits from TikTok Shop fulfillment share and cost advantages in Southeast Asia; TME should watch AI music, watch time, and paid conversion; OTAs face short-term pressure from declining air traffic and tighter airline commission policies. Overall, industry opportunity is more structural than broad beta expansion.

Risks

• China internet consumption demand may weaken, weighing on e-commerce, local life, music, and content platform growth.
• If Douyin local life redemption and operating sophistication fail to improve sufficiently, net GTV and profit quality may lag gross GTV performance.
• Jet fuel prices, falling passenger volumes, and tighter airline commission policies may continue to suppress OTA ticket revenue.
• AI-generated content faces copyright, quality, emotional resonance, and user retention issues, potentially diluting advertising value.
• LLM foundational model price competition may compress industry margins, with commercialization depending on enterprise workflow embedding and vertical data moats.
• Cross-border e-commerce logistics may be affected by regulatory scrutiny and regional provider entry in markets such as Indonesia.
• Large platforms are accelerating AI infrastructure and LLM spending, which could pressure short-term profitability.

What to watch

• Whether Moonshot AI’s year-end ARR exceeds USD1bn as experts expect and the sustainability of overseas API and AI programming revenue.
• Whether Douyin local life reaches break-even in 2H26, and changes in commission collection, redemption rate, and growth in hotel and travel categories.
• The relative net GTV, resilience, and subsidy efficiency of Meituan in-store, hotel, and travel businesses versus Douyin.
• Whether Douyin e-commerce FY26 GMV growth lands in the 15%-16% range, and how AI infrastructure spending impacts profitability.
• Progress of Doubao and Douyin e-commerce agentic commerce in product catalog understanding, supply-chain integration, and real transaction conversion.
• Whether peak travel in July-August declines 4% year-on-year and the impact of airline distribution policies on OTA commission revenue.
• Whether TikTok Shop GMV growth in Southeast Asia and the United States remains resilient, and whether J&T’s parcel share in Southeast Asia is stable.
• Whether Hongguo’s control of AI-generated short drama share improves user retention, watch time, and advertiser acceptance.
• The impact of slowing Soda Music DAU growth, declining watch time, and AI remix copyright issues on music platform competitive dynamics.