The Zhitong Finance App learned that China Galaxy Securities released a research report saying that since 2025, due to AI-related catalysis and repairs on the performance side of some industries, the industry has clearly increased during the year, but this increase has basically been smoothed out within 2026. Looking forward to the future, the core of the media industry is still the production and creation of high-quality content. It is in the middle and upper reaches of the media industry chain and value chain, and has always been a scarce resource for the industry. Therefore, the long-term value of high-quality content production companies remains unchanged. The bank believes that although the early market style favors hardware-side AI infrastructure, with the continuous development of hardware-side AI infrastructure, it will eventually spread to the downstream sector of the industrial chain. Performance driver+AI empowerment is still the core driving force for the growth of the media and Internet industry.
The main views of China Galaxy Securities are as follows:
Revenue side increased year on year, profit decreased year on year
The performance of 125 companies in the SW media industry for the first three quarters of 2026 was counted: the media industry achieved revenue of 394.1 billion yuan in the first three quarters of 2026 (excluding ST, as of October 31), an increase of 2.0% over the previous year. By sector, the advertising, marketing, gaming, and publishing sectors accounted for relatively high revenue, at 34.7%, 25.5%, and 22.0%, respectively. Looking at net profit to mother, the media industry achieved net profit of 30.76 billion yuan in the first three quarters of 2026, a year-on-year decrease of 5.9%.
Gross profit margin increased steadily, and net profit margin fluctuated slightly
The average gross sales margin of the media industry in the first three quarters of 2026 was 33.8%, a slight increase over the same period in 2025 (yoy+1.0pct); the average net sales margin was 8.0%, down 0.6 pct from the same period in 2025. The increase in the share of revenue in the high-margin sector contributed to an increase in the overall gross profit margin of the industry, but at the same time, a negative change in profit margins in some sectors dragged down the overall net interest rate performance of the industry. Compared over a longer time line, the overall gross sales margin of the industry remained stable, and the net sales margin fluctuated slightly.
AI continues to empower core sub-sectors, and the industry still has high growth potential
Currently, the average price-earnings ratio of the media industry is 30.9% lower than the historical average since 2013, and the average price-earnings ratio of all A-shares is 2.2% lower than the historical average since 2013. As of the end of October 2026, the overall price-earnings ratio of the media industry was 22.9 times (TTM overall law, excluding negative values), and all A-shares were 14.9 times. The bank believes that the overall sector fluctuated and adjusted during the year, and the current valuation level has declined somewhat compared to the previous period. In the long run, AIGC technology continues to empower core sub-sectors such as film, television, games, and advertising within the sector, and the overall sector has considerable room for growth in the future.
The performance of the sub-sector is divided, and the flexible sector contributes to the main increase
Looking at sub-sectors, the revenue growth rate of the media industry sub-sectors was divided in the first three quarters of 2026: the top three sub-sectors with year-on-year growth rates were gaming (YOY +18.4%), advertising and marketing (YOY +6.1%), and digital media (YOY +2.6%), with revenue of 10.43 billion yuan, 136.65 billion yuan, and 18.81 billion yuan, respectively. Among them, new product cycles of companies in the game sector started one after another, contributing to incremental performance; the advertising and marketing market continued to maintain a year-on-year growth trend during the year, and the flexible sector contributed the main increase in industry revenue.
Risk Alerts
The risks of the policy and regulatory environment, the risk of increased market competition, the risk of new product launches falling short of expectations, the risk that AIGC technology and application development will fall short of expectations, etc.