Citi has identified a set of beaten‑down Chinese internet stocks that it believes present a buying opportunity after a sharp sell‑off this year. The brokerage’s preferred picks include PDD Holdings Inc (NASDAQ: PDD), Meituan (HK: 3690), Baidu Inc (HK: 9888), NetEase Inc (HK: 9999), Trip.com Group Ltd (HK: 9961) and Full Truck Alliance Co Ltd ADR (NYSE: YMM), all of which are trading close to their cheapest valuations in years despite ongoing strong cash generation.
The broader China internet sector is down roughly 24% year‑to‑date, underperforming global peers as capital has rotated toward artificial‑intelligence hardware winners such as NVIDIA Corporation (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (TW: 2330) and South Korean memory‑chip manufacturers. Many Chinese internet companies are reporting double‑digit losses in 2026, contributing to the valuation compression.
Citi highlights that the recent weakness has largely priced in the underlying strengths of several firms. PDD alone holds about $63 billion in net cash, while Baidu and NetEase also possess sizable cash cushions. Several companies—including Alibaba Group Holding Ltd (HK: 9988), Trip.com, Baidu, NetEase and JD.com—have billions of dollars authorized for share buybacks, which Citi expects could accelerate in the coming months. Notably, Baidu has secured approval for a new $5 billion buyback programme and announced its first‑ever dividend policy.
The bank’s analysis suggests that even if earnings fall short of expectations over the next year, the share prices already reflect most of the negative news, leaving room for upside. Citi’s optimism is further supported by the firms’ large cash reserves, ongoing share‑repurchase activity, and the expectation that investors will eventually rotate back into profitable internet platforms that combine resilient core businesses with growing AI capabilities.
Reporting by Roushni Nair.