– China’s twin leaders in artificial intelligence reported revenue that fell short of estimates, signaling the challenges in translating higher spending on AI into faster growth.
Most Read from Bloomberg Alibaba Group Holding Ltd.‘s revenue grew a less-than-projected 3% the March quarter, even as it posted its first operating loss since the depths of the Covid pandemic in early 2021 because of the cash it’s funneling into AI initiatives
Tencent Holdings Ltd. reported its slowest pace of revenue growth in over a year, though it outpaced its arch-foe thanks to a resilient advertising and gaming business. The twin reports reflect how China’s biggest tech firms are struggling to wring new revenue from AI despite billions of dollars of investment in the data centers, research and talent required to drive the technology’s development. Alibaba’s shares initially slid in US trading Wednesday before rebounding 6.5% with a broader rally in Chinese stocks as US President Donald Trump visits the country.
Like their US peers, Alibaba and Tencent face increasing pressure from investors to translate their AI expenditures into lucrative returns — while at the same time coming under attack from lower-cost rivals such as Moonshot and MiniMax. Among major Chinese tech firms, Alibaba is one of the biggest spenders with a pledge to shell out some 380 billion yuan ($56 billion) on AI over a three-year span. Executives from both companies sought to assure investors that their endeavors in the field would soon bear fruit.