Chinese tech giants are set to release their Q2 earnings, which are expected to show divergent performance, with AI and food delivery remaining key areas of market focus.

Goldman Sachs analysts Ronald Keung and his team stated in a report that the Q2 earnings of Chinese internet giants are likely to exhibit a divergent trend due to the drag from e-commerce and local service platforms, overall profits will see a 10% year-on-year decline for the first time since Q2 2022, but accelerated growth in AI cloud and promising performance in segments like gaming will support some companies.

By company, Goldman expects companies like Tencent, NetEase, and Didi to maintain robust earnings growth, with Tencent's adjusted EBIT growing by 15%, Didi growing by 32%, and NetEase growing by 20%. This contrasts sharply with trading platforms, as Alibaba Group's EBITA is expected to decline by 16%, and Meituan and JD's EBIT will fall by 58% and 70%, respectively.

For investors, key focus points are concentrated on three main lines: accelerated AI cloud service revenue growth, significant profit decline due to food delivery competition, and corporate responses to the "anti-involution" policies.

Strong Momentum in AI Cloud Business

Goldman Sachs predicts that the AI cloud business of Chinese internet giants will experience significant accelerated growth in Q2.

The report forecasts that Alibaba Cloud's revenue growth will rise from 18% in Q1 to 23%, although still lower than Google Cloud's 32% and Microsoft Azure's 39% growth in the same period, it shows a clear positive trend.

This growth is primarily driven by the surge in demand for AI inference and the rapid development of AI applications. According to Goldman Sachs estimates, ByteDance's daily processed tokens in June reached 150 trillion, while Alibaba's was about 4-5 trillion, showing significant growth in AI inference demand in the first half of 2025.

Goldman Sachs estimates that Google's daily token processing volume has increased from 160 trillion in May to 330 trillion in July, ByteDance reached 150 trillion in June, while Alibaba was about 4-5 trillion, highlighting the rapid growth in AI inference demand.

At this year's World Artificial Intelligence Conference (WAIC), major players showcased their latest AI advancements. Tencent unveiled the "Hun Yuan World 1.0," an open-source model for generating 3D worlds, Alibaba introduced the "Quark AI Glasses" and upgraded the Qwen model series, and JD rebranded its large language model as JoyAI. These technological advancements are expected to translate into actual revenue growth in the second half.

Food Delivery Competition Drags Down Platform Profits

Intense competition in the food delivery market has become a major drag on trading platform performance.

As a result, Alibaba Group's adjusted net profit will decline by 7% year-on-year, Meituan and JD's will decline by 28% and 63%, respectively, according to Bloomberg's consistent expectations.

In terms of specific losses, Goldman Sachs estimates Alibaba's food delivery business loss for the June quarter to be ¥11 billion, expanding to ¥19 billion for the September quarter; JD's food delivery business loss exceeded ¥10 billion in Q2. As market leader, Meituan's per-order profit in its food delivery business for Q2, Q3, and Q4 is expected to adjust from the previous ¥0.8/¥0.4/¥0.4 to ¥0.7/¥0.2/¥0.4.

The report points out that competition is not limited to traditional food delivery but also extends to instant shopping. Reports indicate Alibaba's peak daily order volume for instant shopping has reached 15 million, whereas Meituan Flash has 20 million orders. Pinduoduo also launched instant shopping and delivery services, further intensifying market competition.

Goldman Sachs expects e-commerce platforms to continue acquiring new users through food delivery services, especially in the run-up to the Q4 Double Eleven shopping festival. Long-term, this could shift the food delivery market from its current duopoly between Meituan and Alibaba (7.5 to 2.5) to a tripartite structure (5.5 to 3.5 to 1) with JD emerging as the third pole.

Platforms Show Divergent Performance, Resilience in Gaming and Mobility

Amid overall profit pressure, the gaming and mobility segments are expected to maintain strong growth, which are the two sub-sectors Goldman Sachs is most optimistic about.

According to Bloomberg's consistent expectations, Tencent is expected to deliver a stable performance, with Q2 revenue growth of 11% and adjusted net profit growth of 8.5%. Its gaming business stands out, with "Delta Ops" active daily users surpassing 20 million, overtaking "Peacekeeper Elite" to become Tencent's second-largest domestic game. The mobile version of "Valorant" will be launched on August 19, with an expected annualized revenue of ¥7 billion.

Alibaba faces greater challenges, with Q1 revenue expected to grow only 4% (due to the spin-off of RT-Mart and Intime), adjusted net profit falling by 7%. However, client management revenue is expected to maintain a healthy growth of 11%, and cloud business profit margins are likely to improve quarter-on-quarter to 9%.

Meituan Q2 revenue growth is set at 14%, yet adjusted net profit is expected to plummet by 28%. Despite core local commerce revenue maintaining a 13% growth, intensified food delivery competition has significantly decreased profits.

JD.com revenue is expected to grow by 15%, significantly outperforming the overall retail industry, but adjusted net profit is predicted to drop by 63%. JD's retail business profit grows by 15%, but new business losses exceed ¥10 billion.

PDD Holdings faces unique challenges, anticipating Q2 revenue growth of 7%, but adjusted net profit to decline by 36%. Its fully managed business in the U.S. was suspended in May-June, gradually resumed in July, impacting performance.

Xiaomi Q2 revenue is expected to jump 33%, with adjusted net profit up 63%, driven by strong overseas smartphone sales and improved cost efficiency. EPS is projected to grow 54%.

Bilibili is showing signs of recovery. Revenue is set to grow 20%, while adjusted net profit may surge over 290% amid cost controls and better monetization. EPS is expected to triple.

Didi, in a stable market environment, continues growth, with Q2 revenue expected to grow by 9%, adjusted net profit growing by 35%, reflecting the operational leverage effect of its ride-hailing business.