"Doubao AI Assistant" Idealistic vs. Realistic? Morgan Stanley: Major smartphone manufacturers prefer in-house development, making implementation very difficult

Morgan Stanley poured cold water on Doubao's AI assistant in its latest research report, emphasizing its continued optimism for "super applications." According to the Wind Trading Desk, Morgan Stanley stated in its latest report released on December 1 that despite Doubao's demo version showcasing a rich functional ecosystem, it believes that the implementation faces significant challenges. The report pointed out that such deep system-level integration requires modifications to the operating system, which directly touches the core interests of mobile phone manufacturers (OEMs). Morgan Stanley believes that major mobile phone manufacturers and super applications are more inclined to develop their own AI assistants, thus maintaining a positive outlook on application layer stocks and reiterating its "overweight" rating on Tencent, Alibaba, and MEITU. Impressive Features, But Ecological Implementation Is Difficult On December 1, ByteDance released a demo version of the Doubao AI assistant deeply embedded in the smartphone operating system, showcased on a ZTE prototype (Nubia M153) priced at RMB 3,499. The Doubao AI assistant demonstrated impressive "multimodal" and "agent" capabilities on the ZTE prototype. Users can wake up the assistant via voice or side buttons, allowing it to read screen information, compare prices across applications, and even plan itineraries. However, the leap from demonstration to mass production is not easy. The report noted that such deep system-level integration requires modifications to the operating system, which directly touches the core interests of mobile phone manufacturers (OEMs). Morgan Stanley analysts bluntly stated: The realization and promotion of the Doubao AI assistant require in-depth technical cooperation and commercial negotiations with different smartphone OEMs, as it involves operating system-level modifications, which redefine the value proposition of smartphones and weaken the OEMs' bargaining power in the supply chain. Giant Competition: Leading Manufacturers Refuse to Be Others' Wedding Dresses One reality that investors must recognize is that giants controlling hardware entry will never easily hand over the keys. Morgan Stanley believes that leading manufacturers with strong technical capabilities are more inclined to take their fate into their own hands. Major smartphone OEMs with strong technical capabilities, including Apple, Huawei, and Xiaomi, are more likely to develop such AI assistants independently rather than collaborate with ByteDance. We believe there are very few OEM options left for ByteDance to collaborate with. This means that for Doubao to build a broad hardware ecosystem, especially in the fiercely competitive Chinese market, it faces extremely high entry barriers. However, it is worth noting that ByteDance has indicated it does not plan to develop smartphones independently but is discussing potential collaborations with multiple phone manufacturers. The feasibility of this business model has become a focal point of market attention. Investment Logic: Still Optimistic About "Super Applications" Since breakthroughs at the hardware level are fraught with difficulties, where should funds flow? Morgan Stanley's strategy is clear: continue to go long on software application giants with massive traffic and scenarios. Although the market is concerned that system-level AI like Doubao may divert traffic from apps, Morgan Stanley believes that the position of China's "super applications" (such as WeChat, Taobao, and Meituan) is difficult to shake, and they are also building their own AI moats. In addition, Morgan Stanley reiterated its "Overweight" rating on Tencent, Alibaba, and MEITU, providing specific logical support: Tencent: Seen as China's best AI application agent. The report reveals that "Tencent will soon launch its next-generation AI model, Mix Yuan 2.0, which will further consolidate Tencent's position in the AI field." Alibaba: The best AI infrastructure target in China, with cloud revenue growth expected to accelerate. MEITU: As a beneficiary of AI multimodal, its value lies in its "last mile" service capability, which is difficult for general AI assistants to fully replace