On March 26, Meituan released its financial results for the fourth quarter and full year of 2025. The report showed that the company achieved annual revenue of 364.9 billion yuan. However, impacted by an intense "food delivery battle," Meituan recorded a net loss of 23.4 billion yuan for the year, with an operating loss of 17 billion yuan.

In contrast, Meituan had reported a net profit of 35.808 billion yuan in 2024. This represents a year-on-year decline in profit of approximately 59.2 billion yuan. Although Meituan stated that it continues to hold a stable market share of over 60% in gross transaction value (GTV) in the food delivery sector, the fierce competition has raised questions about the defensibility of its local commerce business.

While defending its market share in food delivery, Meituan's market capitalization has experienced significant volatility over the past year. The current market value is roughly half of what it was at last year's peak. As major internet companies increasingly focus on AI-driven narratives, Meituan is under pressure to present a compelling new growth story.

As of midday on March 27, Meituan's stock price in Hong Kong was HK$87.6 per share, with an intraday increase of 1.04%, bringing its market capitalization to HK$540.9 billion.

During an earnings conference call on the evening of March 26, Meituan CEO Wang Xing stated that in the face of the AI revolution, the only reasonable strategy is to adopt an offensive rather than defensive posture. However, he emphasized that Meituan will not blindly pursue becoming a "token factory" but will instead treat AI as a strategic opportunity to enhance, strengthen, and potentially transform its core local services business.

He revealed that since early 2023, Meituan has made substantial investments in capital expenditure and AI talent. "Excluding companies with cloud computing businesses, Meituan's investment in AI is likely the largest among domestic enterprises, and we have maintained this strategy for over three years," Wang said. The company is continuing to develop its self-developed foundational large model, LongCat, while also collaborating with leading third-party models to improve its understanding of the real, physical world.

The past year has challenged the perceived strength of Meituan's competitive moat. From the loss figures reported in the first three quarters of 2025 to the profit warning issued in February 2026, Meituan's full-year loss for 2025 was largely anticipated.

More concerning than the short-term losses is the fact that the financial downturn has led to some skepticism regarding the sustainability of Meituan's dominance in the local services sector. Having previously emerged victorious from the "group-buying wars" and maintained a leading position against competitors like Ele.me and Douyin's local services, Meituan's moat had seemed robust.

After a difficult 2025, Meituan's local commerce business swung from an operating profit of 52.4 billion yuan in 2024 to an operating loss of 6.9 billion yuan in 2025. The impact of the food delivery competition resulted in the local commerce segment—once considered a bastion of profitability—earning nearly 59.3 billion yuan less than the previous year.

For comparison, Alibaba's financial report for the third quarter of its 2026 fiscal year (ending December 31, 2025) showed an operating profit of 10.645 billion yuan, a decline of 74% year-on-year. This implies that Alibaba's profit in the fourth quarter of 2025 alone was approximately 30.5 billion yuan lower than the same period a year earlier.

Meituan claimed that in the food delivery sector, it has maintained a stable GTV market share exceeding 60% while incurring significantly lower losses than its competitors. Furthermore, the core local commerce segment's operating loss narrowed considerably in the fourth quarter compared to the third quarter.

Whether the food delivery price war has truly ended was a hot topic of market discussion ahead of the earnings release. Compared to the relatively subdued approach of JD.com's food delivery service and the deep-pocketed, aggressive spending of Alibaba, Meituan appears more eager to extricate itself from the competitive quagmire.

Recent statements from JD.com and Alibaba during their March earnings calls suggest a potential shift. JD.com CEO Sandy Xu indicated that if market competition stabilizes, the company's total investment in its food delivery business in 2026 would decrease compared to 2025. Alibaba's e-commerce chief, Jiang Fan, stated that the company remains committed to achieving a total scale of over one trillion yuan in the near future and expects its instant retail business to become profitable by fiscal year 2029.

Despite regulatory calls to "resolutely curb excessive internal competition," as long as rivalry persists in the instant retail market, comprehensive competition on price and service among the giants is unlikely to cease. For Meituan, Alibaba remains a formidable opponent in the local commerce space for 2026.

Observers note that since the second quarter of 2025, JD.com, which initially triggered the aggressive competition, has significantly scaled back its subsidies. Meanwhile, Alibaba's Taobao Quick Purchase, backed by strong cash flow, continues to offer substantial subsidies. Meituan has also maintained subsidies for its high-tier membership programs and high-value orders.

Amid the fallout from the food delivery battle, Meituan's market capitalization fell below HK$500 billion in February 2026, roughly half of its peak value of HK$1.2 trillion in February 2025.

During the recent conference call, analysts notably refrained from using the familiar term "Brother Xing" when addressing CEO Wang Xing, opting instead for "xingwang" or simply "xing." This shift followed Wang's comments at an internal management meeting about two weeks prior, where he expressed a desire to "reduce colloquialisms" within the company culture. He cited being called "Brother Xing" as an example of such informality, demonstrating his personal commitment to fostering a more professional tone and embracing new trends.

Similarly, after being mired in the food delivery conflict throughout 2025, Meituan as a company needs to embrace new technological waves and present a convincing new narrative to the market.

In the latest financial reports and earnings calls from major internet firms, the AI narrative has been a central theme. Meituan's latest earnings report also dedicated significant space to outlining its AI strategy. The report indicated that in 2025, Meituan continued to increase its AI investments, focusing on building an AI foundation and operational capabilities for the physical world. The company's annual R&D spending reached 26 billion yuan, a 23% increase year-on-year, primarily driven by higher AI investments and employee compensation costs.

Wang Xing reiterated his perspective on AI and Meituan's strategic approach during the call. He believes the key to an AI "super app" lies in accurately understanding user needs and efficiently executing tasks, a complexity far beyond that of a simple "chatbot." This is particularly true in local services, where consumption scenarios are diverse, merchant information is vast and fragmented, and much data remains offline. Additionally, local services platforms require deep management of fulfillment and delivery—capabilities that general-purpose AI models currently lack.

Wang stated that through years of operation, Meituan has accumulated rich data about the physical world and possesses the internet's most comprehensive repository of authentic user reviews. The company has now rolled out its AI assistant, "Xiao Tuan," integrated within the Meituan app, to all users, covering the full range of local service categories. Users can input their service requirements, and the assistant quickly matches them with high-quality merchants and products.

Wang provided an example to illustrate the required capabilities: "I work in Wangjing, and my friend is in Zhongguancun. We plan to have lunch together but only have two hours. We need to find a Sichuan restaurant located roughly midway, with good food and convenient parking." To fulfill such a common request, AI needs access to mapping data, point-of-interest (POI) information, and real-time restaurant availability; otherwise, it fails to meet the user's actual need.

Leveraging massive amounts of physical-world information, "Xiao Tuan" can quickly extract valuable insights from user reviews and deduce answers tailored to individual preferences.

Wang Xing expressed that model capabilities will continue to be optimized, and Meituan will further integrate "Xiao Tuan" into its app. "We aim to use next-generation AI technology to make the Meituan app the go-to platform for fulfilling local lifestyle needs. We will enhance AI-powered search and execution capabilities, striving to upgrade Meituan into a leading AI-driven application and become the primary AI gateway for future local service demands," he concluded.