Morgan Stanley recently released the sixth installment of its AlphaWise China Advertiser Survey, indicating that AI-driven advertising is first reshaping the allocation of ad budgets before expanding the overall total addressable market (TAM).
Morgan Stanley recently released the sixth installment of its AlphaWise China Advertiser Survey, which indicates that AI advertising is first reshaping the allocation of ad budgets before expanding the overall addressable market (TAM). AI will further widen the disparity in ad‑budget shares across platforms, enabling leading platforms to integrate more deeply into commercial workflows and unlock greater potential for monetization growth. Key Overweight (OW) targets:$Alibaba (BABA.US)$ 、 $TENCENT (00700.HK)$ 、 $MEITUAN-W (03690.HK)$ 。
In its report, Morgan Stanley notes that as AI applications continue to deepen, reallocating capital is taking precedence over expanding market size. Seventy-two percent of AI users are reshuffling their existing advertising budgets, while 74% report a further increase in the concentration of ad spend on leading platforms.
AI is widening the gap between platforms rather than reshaping the industry landscape. Douyin and Taobao/Tmall have posted the largest gains in market share, while Tencent and Meituan have benefited from integrated product capabilities and a closed-loop transaction ecosystem.
The bank projects that by 2030, the total measurable scale of AI commercialization will reach RMB 291 billion; by 2040, the candidate‑set advertising market is expected to grow to RMB 319 billion, while AI‑driven attribution commissions could amount to RMB 1.24 trillion.
The firm identifies two major development phases: a profit‑transition phase by 2030 and an industry‑maturity phase by 2040. By 2030, the sector's value will be driven primarily by improved ad‑monetization efficiency, reallocated budgets, and a shift toward high‑intent search and intelligent‑agent‑driven traffic scenarios, with the total commercial AI market reaching RMB 291 billion.
By 2040, as intelligent agent workflows and closed-loop attribution mechanisms mature, the bank estimates AI‑mediated advertising revenue at RMB 319 billion and AI‑driven attribution‑based transaction commissions at RMB 1.24 trillion. However, after accounting for the cannibalization effect on traditional businesses and partner revenue sharing, the overall net incremental market size will be reduced.
The key to capturing value lies in commercial execution, rather than merely technological leadership in modeling. The platform monetizes AI revenue through three distinct pathways:
1. Predictive AI enhances the monetization efficiency of existing traffic; platforms that leverage model‑driven matching to boost advertisers' ROI can secure larger budgets.
2. Candidate set traffic layer upgrade: Commercial activities are shifting toward high-value search and intelligent agent scenarios (such as WeChat Search, Kuaishou Search, the soon-to-be-launched WeChat AI intelligent agent, and standalone AI applications). Standalone AI and embedded AI can capture user entry points; content platforms can convert user attention into purchase intent; and transaction platforms can extend upstream to the user discovery stage.
3. The transaction layer is upgraded, establishing a merchant operating system to generate commission revenue and recurring income tied to ongoing merchant workflows; this benefits platforms that control settlement capabilities and performance data.
Morgan Stanley believes that AI has amplified the platforms' existing strengths rather than resetting the competitive landscape. Douyin and Taobao/Tmall are the most certain beneficiaries in terms of market share; WeChat possesses strong risk resilience while also enjoying growth potential from product integration; Meituan benefits from the business logic of a closed-loop transaction ecosystem. Kuaishou and Baidu still have room for recovery.