In 2026, the bank remains optimistic about investment opportunities in the AI application space with a focus on AI video, AI advertising, AI comic series, and AI games.
According to Zhitong Finance APP, Guoyuan Securities released a research report stating that the media sector will outperform the overall market in 2025, with the gaming sector driving the growth. This was primarily driven by a recovery in industry sentiment, strong product supply, and stable gaming license approvals. In the film and television field, policies have been adopted to give preferential treatment to long-form dramas and variety shows, while the overseas expansion of short dramas and the rise of AI-generated comics have brought new growth opportunities. Throughout the year, large-scale AI models continued to iterate, commercialization accelerated, and specialized applications emerged. Looking ahead to 2026, the direction of applications such as AI video, advertising, comics, and games is worth paying attention to.
Kokugen Securities’ main viewpoints are as follows.
Sector Review: Sector Outperforms Index, Gaming Leads Earnings Driven by Earnings Per Share (EPS)
In 2025, the media sector rose 24.75%, outperforming the overall market and ranked 8th among Shenwan’s 31 sub-industries. Gaming led the sector with an increase of 60.67%. In the first three quarters, the industry’s revenue grew by 5.92% and the profit surged by 37.12% by EPS. Current industry valuations are in the 47th percentile of the last three years’ valuations, with gaming and movie theater chains offering attractive valuations.
Games: Mobile gaming sentiment recovery, diverse growth in gameplay, themes and genres
In 2025, the mobile gaming market achieved sales revenue of RMB 257.076 billion, an increase of 7.92% year-on-year, due to a recovery in sentiment. New releases like Supernatural Action Group and Staff and Sword Legend outperformed expectations during the year, while long-running titles like Honor of Kings, Peacekeeper Elite, and Dream Westward Journey performed very well over the long run. From a policy perspective, gaming license issuance remained stable throughout 2025, benefiting the supply side. Additionally, organizational adjustments by several game companies are nearing completion, allowing mid-level developers to begin new product cycles. In 2025, product offerings have diversified across gameplay, themes, and genres. Tactical gameplay (“explore, fight, retreat”) grew in popularity, and several products achieved great success during the year. Horror-themed games stood out. FPS has achieved significant growth in the domestic market. And “SLG+X” has exceeded the conventional upper limit of SLG profits. As we head into 2026, we expect a rich product pipeline, with major companies focusing on FPS and open-world categories, while mid-tier developers also have notable projects in their backlog.
Movies and TV: Benefits from policy Overseas expansion of full-length dramas and variety shows, short dramas, proliferation of AI comics
In 2025, the implementation of the “21 Policies on Radio and Television” has benefited long-form dramas and variety shows. In the short drama category, the domestic market size reached RMB 67.79 billion, a year-on-year growth of 34.4%, with IAA dominating the market with 71%. The overseas market experienced rapid growth, with an estimated size of RMB 21.07 billion, an increase of 145.7%. By 2025, competition for traffic among overseas short drama platforms has intensified, but the market share of major companies has remained stable, and an inflection point in profitability is expected to occur next year. Comics are experiencing rapid growth, and the annual market size is expected to exceed 20 billion yuan. The production cost is significantly lower than live-action short dramas, and AI technology has greatly improved output efficiency. Long-form and short-form video platforms introduced incentive policies for comics to improve ROI.
AI applications: Continuous model iteration, accelerated commercialization
In 2025, the capabilities of AI models continue to evolve, with larger models such as Gemini 3, ChatGPT 5.2, DeepSeek 3.2, and Qwen 3 catching up. For multimodal applications, Sora 2, Nano Banana Pro, and Veo 3 caught our attention. Meanwhile, commercialization of AI will accelerate in 2025. According to The Information, OpenAI’s ARR reached $12 billion in July 2025. In terms of vertical applications, AI Programming, AI Design, AI Search, and AI Video each had leading products generating over $100 million in annual revenue. Recently, Minimax and Zhipu AI have facilitated capitalization, potentially making the commercial loop faster. In 2026, we remain optimistic about investment opportunities in the AI application space, particularly in AI video, AI advertising, AI comics, and AI games.
Related targets
Specific stocks recommended include Giant Network, Kingsoft, Perfect World, Century Huatong, 37 Interactive Entertainment, G-bits, Shenzhou Ta Yue, Zhejiang Digital Culture, Kunlun Wanwei, Kuaishou, XD Inc., Yaoji Technology, Shanghai Film, Mango Super Media, Southern Media, and Wanxin Media.
risk warning
risks related to lower-than-expected AI developments, tightening regulatory policies, slower-than-expected large-scale model iterations, and lower-than-expected commercialization of our core products;
