A report from Shenwan Hongyuan Group Co., Ltd. indicates a strong performance for China's e-commerce platforms in Q1 2026, with both core business growth and profitability showing signs of improvement. As the industry shifts away from aggressive investment in new ventures and intense subsidy competition in instant retail, the brokerage anticipates e-commerce platform profits may see a better-than-expected recovery in the second half of the year. The continuous iteration of large AI models and their deeper integration into end-user devices and specific scenarios have significantly enhanced AI capabilities. The firm is optimistic about the new growth opportunities created by the synergy between AI and e-commerce.
Online Consumption Recovers, Platform GMV and Monetization Rates Show Marginal Improvement
According to the National Bureau of Statistics, total retail sales from January to April 2026 reached 16.49 trillion yuan, a year-on-year increase of 1.9%. Online retail sales of goods and services amounted to 6.53 trillion yuan, up 6.6% year-on-year. Within this, online retail sales of physical goods grew 5.7% to 4.12 trillion yuan, with an online penetration rate of 25.0%, indicating online channels remain a crucial driver of consumption growth. The cumulative volume of express delivery services reached 64.57 billion parcels, a 5.1% increase, roughly aligning with the growth rate of online goods retail.
In Q1 2026, GMV growth for traditional e-commerce platforms stabilized, while user engagement continued to rise. JD.com's quarterly active user count grew over 20% year-on-year, with shopping frequency up 37%. Alibaba's instant retail order volume reached 2.7 times that of the same period last year. Pinduoduo maintained rapid growth in its transaction service revenue. The 618 shopping festival sustained consumer enthusiasm, with platform competition evolving from a pure focus on low prices to a comprehensive contest involving subsidy efficiency, AI tools, and refined operational capabilities.
AI Application Penetration Accelerates, Cloud and Model Services Enter Rapid Commercialization Phase
Rapidly expanding AI demand has led major internet companies to increase investments in infrastructure and model applications. According to Omdia, China's cloud infrastructure service spending in Q4 2025 was approximately $14.7 billion, with full-year growth maintaining around 30%. Alibaba Cloud leads China's AI cloud market with a 38.1% share. User bases for leading AI-native apps are expanding quickly. QuestMobile data shows that by March 2026, monthly active users for AI-native apps reached 440 million, adding over 130 million users in a single quarter. Apps like Doubao, Qwen, and DeepSeek reached MAUs of 345 million, 166 million, and 127 million respectively. By April 2026, Qwen App's MAU further increased to over 220 million.
The focus of AI competition among major internet firms is shifting from pure model capability to scenario expansion, ecosystem integration, and commercial value realization. Concurrently, companies like Alibaba Cloud, Tencent Cloud, and Baidu Cloud have frequently raised prices for AI computing power, storage, and model API calls. ByteDance and Tencent Cloud have begun charging for model APIs, while DeepSeek and Xiaomi are lowering prices to attract developers, collectively advancing the commercialization of the AI industry chain.
Instant Retail and Cross-border E-commerce Shift from Subsidy Wars to Efficiency Focus
Since Q4 2025, subsidy competition in the industry has marginally cooled, leading to gradual optimization of the competitive landscape. Analysys data indicates that in Q4 2025, Taobao Flash and Meituan Instant Retail each held about a 45% market share, with JD.com ranking third at 8.4%. Year-on-year trends show that by March 2026, traffic for standalone food delivery apps had declined, while traffic for the main platforms of related companies continued to rise. After initial consumer habit cultivation, user demand is migrating from pure food delivery to comprehensive consumption platforms. This shift suggests that as major platforms reduce subsidies, they are beginning to focus more on unleashing ecosystem synergies.
In cross-border e-commerce, customs data shows China's cross-border e-commerce imports and exports reached 618.46 billion yuan in Q1 2026, with exports accounting for 473.55 billion yuan. Overall, platform competition is pivoting from low-price subsidies to supply chain capabilities, fulfillment efficiency, and localized operations. Meanwhile, AI technology continues to permeate the entire e-commerce chain, helping platforms improve operational efficiency and accelerate local delivery and O2O channel development.
Core Revenue Remains Steady, Cloud Business Grows Rapidly, Profits Temporarily Pressured by AI and Other Investments
According to company filings, in Q1 2026, Alibaba, JD.com, Pinduoduo, and Meituan reported revenues of 243.4, 315.7, 106.2, and 91.0 billion yuan respectively, with year-on-year growth rates of 2.9%, 4.9%, 11.0%, and 5.6%. Alibaba's Customer Management Revenue grew 1.2%, JD Retail revenue increased 1.8%, Pinduoduo's transaction service revenue surged 19.9%, and Meituan's core local commerce revenue saw a slight 0.1% increase. Revenue for Alibaba Cloud Intelligence Group grew 38% year-on-year to 41.6 billion yuan, with AI-related product revenue achieving triple-digit year-on-year growth for the eleventh consecutive quarter.
On the profit side, Q1 2026 net profits for Alibaba, JD.com, Meituan, and Pinduoduo were 0.9, 73.8, -49.7, and 140.7 billion yuan respectively. Investments in AI infrastructure, instant retail, and overseas expansion continue to impact short-term profitability, but are expected to enhance long-term platform competitiveness.
Risks include weaker-than-expected consumer spending, intensifying industry competition, slower-than-expected new business development, and higher-than-anticipated subsidy expenditures.