Doubao AI assistant "Ideal is rich, reality is bony"? Morgan Stanley: Major smartphone manufacturers prefer in-house development, making implementation very difficult.

Morgan Stanley poured cold water on the Doubao mobile AI assistant in its latest research report, emphasizing that it still prefers "super apps."

According to ChaseTrade, Morgan Stanley stated in its latest research report issued on December 1st that although the demo version of Doubao showcased a rich functional ecosystem, it believes that there are significant challenges to implementation.

The report points out that such deep system-level integration requires modification of the operating system, which directly touches the core interests of mobile phone manufacturers (OEMs).

Morgan Stanley believes that major smartphone manufacturers and super apps are more inclined to develop their own AI assistants rather than rely on third parties. Therefore, it maintains its optimistic stance on application-level stocks, reiterating its "Overweight" rating for Tencent, Alibaba, and Meitu.

Impressive Features, But Ecosystem Implementation Struggles

On December 1, ByteDance released a demo version of its Doubao AI assistant, deeply embedded in the smartphone operating system, showcased on a Nubia M153 prototype, priced at 3,499 RMB.

Doubao AI assistant demonstrated by ByteDance on the ZTE prototype indeed showcased impressive "multimodal" and "agent" capabilities. Users can wake the assistant via voice or a side button, enabling it to read screen information, compare prices across apps, and even plan itineraries.

However, bridging the gap from demo to mass production is not easy. The report points out that such deep system-level integration requires modifications to the operating system, which directly impacts the core interests of phone makers (OEMs). Morgan Stanley analysts bluntly stated:

The implementation and promotion of the Doubao mobile AI assistant require in-depth technical cooperation and business negotiations with various smartphone OEMs, because it involves operating system-level modifications, which redefine the value proposition of smartphones and weaken OEMs’ bargaining power in the supply chain.

Industry Giants: Leading Manufacturers Refuse to Work for Others

One reality that investors must see clearly is that giants who control the hardware entry-point will not easily hand over the keys. Morgan Stanley believes that leading manufacturers with strong technical capabilities prefer to keep their destiny in their own hands.

Major smartphone OEMs with strong technical capabilities, including Apple, Huawei, and Xiaomi, are more likely to develop such AI assistants themselves, rather than cooperate with ByteDance. We think the number of OEMs available for cooperation with ByteDance is very limited.

This means for Doubao to build a broad hardware ecosystem, especially in the fiercely competitive Chinese market, faces extremely high entry barriers.

However, it is worth noting that ByteDance has stated it does not plan to develop smartphones itself, but is discussing potential cooperation with multiple phone manufacturers. The feasibility of this business model has become a focus of market attention.

Investment Logic: Still Bullish on "Super Apps"

Since making breakthroughs at the hardware level is so difficult, where should capital flow? Morgan Stanley’s strategy is clear: continue to go long on software application giants with massive user traffic and use scenarios. Although the market is worried that system-level AI like Doubao may divert app traffic, Morgan Stanley believes that China's "super apps" (like WeChat, Taobao, Meituan) have unshakable positions, and they are also building their own AI moats.

In addition, Morgan Stanley reiterated its "Overweight" rating for Tencent, Alibaba, and Meitu and offered specific logical support:

Tencent: Considered the best AI application proxy in China. The report reveals, "Tencent will soon launch its next-generation AI model, Hunyuan 2.0, which will further strengthen its position in the AI field."Alibaba: The best AI infrastructure play in China, with accelerated growth expected in cloud revenue.Meitu: As a beneficiary of AI multimodal technology, its value lies in its 'last mile' service capabilities, something general AI assistants cannot fully replace.

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The above compelling content is from ChaseTrade.

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