China Aviation Securities: AI applications move from theme to fulfillment, content supply drives sector repair

The Zhitong Finance App learned that China Aviation Securities released a research report saying that sentiment in the media sector is picking up in the short term, and AI applications are shifting from themed investment to fundamentals. In July, the supply of high-quality content was improved and the multi-modal model continued to be iterated, driving the boom in the film and television cinemas, short dramas, and advertising and marketing sectors. Currently, the media sector's valuation and chip structure are relatively low. As AI video generation capabilities cross the commercial threshold, domestic model calls increase, and corporate payment demand grows, AI commerce is gradually forming a closed loop. The proposal focuses on the certainty of performance delivery, giving priority to token operation and AI marketing, followed by multimodal content companies with IP and platform advantages, and media channels that benefit from AI applications.

The main views of China Aviation Securities are as follows:

Sentiment picked up in the media sector in July, but performance still needs to be fundamentally improved during the year

The media sector rose 3.09% in July, ranking 12th in Shenwan's first-level industry; publishing, television broadcasting, and advertising marketing led the way, rising 8.94%, 7.87%, and 6.45%, respectively. Since the beginning of the year, the media sector has declined by 16.24%, ranking 23rd, mainly due to factors such as capital bias towards AI computing power hardware, slow implementation of application-side performance, and declining institutional allocation. Subsequent sector repairs will still require support from commercializing AI applications and improving mid-report performance.

The boom in key industries is divided, focusing on the improvement of content supply and the progress of AI industrialization

In terms of film and television theaters, the centralized screening of high-quality films led to a marked recovery in the box office and number of moviegoers in July, and multi-genre films are expected to continue the popularity of summer programs in August; in terms of short dramas, AI continues to lower the threshold for content production and accelerate video conversion, but high purchasing costs, declining platform subsidies, and stricter regulations will accelerate industry clearance, and the importance of high-quality IP and platform distribution capabilities will further increase; In terms of advertising and marketing, AI applications are gradually entering the centralized customer acquisition stage, and media and Internet advertising are expected to accept incremental budgets, marketing agents, GEO, and dialogue Then push The industry is upgrading from single-point creative tools to full-link automation.

AI applications are shifting from thematic investments to fundamentals, focusing on commercial implementation

The Seedance 2.5 upgrade and domestic model share increase respectively strengthened content supply and token demand, superimposed performance verification by overseas technology companies, and gradually formed a closed loop in the AI industry chain. It is proposed to follow three main lines of layout: one is commercialization of highly deterministic token operations and AI marketing, focusing on Easypoint World and Blue Cursor; second, benefiting from multi-modal cost reduction and IP video content platforms, focusing on Chinese online, Kunlun Wanwei, and Palm Reading Technology; third, benefiting from media channels where AI applications concentrate on customer acquisition, and focus on mass media with both defensive attributes and incremental flexibility.

Risk Alerts

The commercialization and performance of AI applications fell short of expectations; the supply of film and skit content fell short of expectations; the purchase cost of short dramas continued to rise; changes in platform policies and regulatory rules; advertisers' budget recovery fell short of expectations; industry competition intensified; and the operating performance of key companies fell short of expectations.