Morgan Stanley's latest AlphaWise survey of Chinese advertisers reveals a pivotal insight: AI is first transforming how advertising budgets are allocated before it expands the overall total addressable market. The report suggests that AI will further widen the gap in ad spending share among platforms, pushing leading players to integrate deeper into commercial workflows and unlock greater monetization potential. The bank's key overweight-rated names include Alibaba, TENCENT, and MEITUAN-W.
The report highlights that as AI applications mature, budget reallocation takes priority over market expansion. Notably, 72% of AI users are redistributing their existing advertising budgets, while 74% report increased concentration of ad spend on fewer platforms. Rather than resetting the industry landscape, AI is amplifying the disparities between platforms. Douyin and Taobao/Tmall are capturing the largest share gains, while TENCENT and MEITUAN-W benefit from integrated product capabilities and closed-loop transaction ecosystems.
Morgan Stanley projects that by 2030, the measurable AI commercialization market will reach 291 billion yuan. Looking further ahead to 2040, AI-mediated advertising is expected to hit 319 billion yuan, with AI-attributed transaction commissions reaching 1.24 trillion yuan. The bank outlines two distinct development phases: a profitability transition period through 2030 and an industry maturity phase by 2040.
In the first phase through 2030, industry value will primarily derive from enhanced ad monetization efficiency, budget reallocation, and shifts toward high-intent search and intelligent agent traffic scenarios, totaling 291 billion yuan in AI commercialization. By 2040, as intelligent agent workflows and closed-loop attribution mechanisms mature, the bank estimates AI-mediated advertising revenue of 319 billion yuan and AI-attributed transaction commissions of 1.24 trillion yuan. However, after accounting for cannibalization of traditional business and partner revenue sharing, the actual net market growth will be somewhat reduced.
The critical determinant of value capture lies in commercial control rather than mere model technology leadership. Platforms can monetize AI through three key pathways. First, predictive AI enhances monetization efficiency of existing traffic; platforms that translate model-matching advantages into improved advertiser ROI can command higher budgets. Second, upgrading the candidate-set traffic layer involves shifting commercial activity toward high-value search and intelligent agent scenarios, including WeChat Search, Kuaishou Search, the upcoming WeChat AI agent, and standalone AI applications. Standalone and embedded AI can capture user entry points, content platforms can convert user attention into consumption intent, and transaction platforms can expand upstream into user discovery.
Third, transaction-layer upgrades involve building merchant operating systems that generate commission income and recurring merchant workflow revenue, favoring platforms with settlement capabilities and performance data. Morgan Stanley believes AI amplifies platforms' existing strengths rather than resetting the competitive landscape. Douyin and Taobao/Tmall are the most structurally certain share beneficiaries, while WeChat possesses robust risk-resistance capabilities alongside growth potential from product integration. MEITUAN-W benefits from the commercial logic of its closed-loop transactions. Additionally, Kuaishou and Baidu still present recovery opportunities in the current environment.