- Trip.com and Tencent Music key picks, wary of Baidu
- AI, innovation and monetisation crucial for returns in 2025
- Shanghai Composite drifted since September rally
China’s stock market has struggled to gain meaningful momentum so far in 2025 but analysts at Bernstein have identified key themes that they believe will shape the year ahead for some of its most exciting internet stocks.
A consumer shift toward services, integration of AI into product ecosystems, and a growing emphasis on monetisation through innovation will drive returns, Bernstein says, with companies offering distinct content or supply advantages expected to emerge as long-term winners amid these structural trends.
Bernstein analysts flag Trip.com (TCOM:NASDAQ) and Tencent Music Entertainment (TME:NYSE) as its standout candidates among its coverage, but remains wary over AI hopeful Baidu (BIDU:NASDAQ).
BERNSTEIN’S WINNERS
Trip.com is well-positioned to benefit from a robust travel recovery, with outbound travel spending projected to grow by 25% in 2025, according to Bernstein. The platform’s continued market share gains and efficient operating model support Bernstein’s ‘Outperform’ rating and a raised price target of $85, versus the current $63.15.
Tencent Music is also rated ‘Outperform’ with a price target of $13, 21% higher than the current $10.74. Its Super VIP product is expected to expand in 2025, introducing new features such as exclusive fandom interactions and higher-quality audio. This should drive subscriber growth and increase average revenue per use, contributing to an attractive subscription-based revenue model.
MONETISATION CHALLENGES
Conversely, Baidu faces monetisation challenges as its AI and advertising recovery appears delayed until 2026. The firm’s long-term return on invested capital trajectory remains suboptimal, prompting Bernstein to lower its price target to $87 and maintain a ‘Market-Perform’ rating.
‘2025 is an important transition year for China travel as the last of Covid tailwinds flow through with more normalised growth towards the second half of the year’, analysts wrote.
Bernstein’s analysis underscores the divergent opportunities within China’s mid-cap internet sector, with leaders in travel and media poised to leverage unique competitive advantages while others grapple with execution challenges.
The Shanghai Composite Index rallied on 20%-plus to nearly 3,500 in September 2024 following new stimulus measures announced by Beijing. Since then, the benchmark has drifted lower, tracking around 3,160.
