Morgan Stanley released a report on the outlook for Chinese Network Technology stocks this year, stating that the industry may face uncertainties from external factors (tariffs, sanctions) and internal factors (policies, competition). The firm expects Network Technology companies to expand in AI and overseas business while focusing on capital returns, with Tencent (00700.HK) being the industry's top pick. It has given 'Bullish' ratings to Trip.com (TCOM.US) and Meituan (03690.HK), and assigned 'Market Perform' investment ratings to Alibaba (BABA.US), JD.com (JD.US), Kuaishou (01024.HK), and Baidu (BIDU.US).

The firm indicated that the priority for looking bullish by market segment is Social/Gaming (Tencent), followed by online travel platforms (OTA), local services, Gaming (excluding Tencent), Social Media/Entertainment (excluding Tencent), verticals, and finally, e-commerce, with live streaming being the last.

Morgan Stanley stated that Tencent remains its top choice, with its WeChat store, AI's 2C applications, and capital management likely sufficient to offset challenges in the Gaming business. The firm also sees good opportunities for consumer recovery and overseas prospects for Trip.com and Meituan, both receiving 'Bullish' ratings. NetEase (NTES.US) has been upgraded to 'Bullish', as its Gaming business is expected to recover from the downturn. (wl/u)

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