China AI earnings shift gains pace as agentic super apps emerge: report
AI video generation expected to expand to US$39b by 2033.
China’s artificial intelligence sector is undergoing a significant transformation as the market shifts its focus from basic technological breakthroughs to actual monetization and earnings delivery.
According to a recent sector update from UOB Kay Hian, the industry maintains an overweight rating, fueled by the rapid emergence of "AI super apps" that leverage agentic AI to handle complex, end-to-end tasks within single conversational interfaces.
These apps are evolving beyond simple chatbots into intelligent assistants capable of executing actions like end-to-end shopping, payment, and fulfillment without requiring users to switch platforms.
The battle for consumer entry points is currently dominated by mega-cap players, with ByteDance’s Doubao leading the market with 218.9 million monthly active users (MAU) as of December 2025.
Tencent is aggressively pursuing user engagement through its Yuanbao app, recently launching a RMB1b cash incentive campaign to coincide with the 2026 Lunar New Year.
Meanwhile, Alibaba has integrated its Qwen agent deeply across its ecosystem, enabling unified services that are expected to drive resilient cloud revenue growth in the coming years.
Technological milestones are also reaching a global scale, with Alibaba’s latest reasoning model, Qwen3-Max-Thinking, reportedly achieving performance parity with international leaders such as GPT-5.2 and Claude Opus 4.5.
In the multimodal space, Kuaishou’s Kling AI has seen a surge in overseas adoption, particularly in markets like the US and Korea, where its realistic motion and video generation features are being monetized at premium price points.
Analysts expect the global market for AI video generation to expand from US$1b in 2025 to US$ 39b by 2033, positioning Chinese players to capture significant share through cost-efficient architectures.
Beyond consumer apps, the sector is seeing rapid growth in hardware-integrated AI and public sector deployments. StepFun has emerged as a leader in "physical AI" through deep operating system-level partnerships with approximately 60% of domestic smartphone brands, reaching over 42 million installations.
In the public sector, iFLYTEK remains the dominant winner of government AI contracts, securing approximately RMB2.32b in awards by 2025 for application-oriented projects in healthcare, education, and smart governance.
Despite the growth, the industry faces persistent challenges, particularly regarding the availability of next-generation hardware. Access to high-performance GPU chips, such as those from Nvidia, remains a critical factor in bridging the gap between Chinese and US AI capabilities.
Additionally, high research and development costs and evolving regulatory concerns regarding data security continue to be monitored as primary risks.
Nevertheless, the shift of advertising budgets toward AI-native, ROI-driven formats is expected to provide a sustainable path for earnings growth among the sector's top picks, including Baidu, Alibaba, and Kuaishou.
