Alibaba and Tencent diverge on AI spending strategies
Despite facing revenue challenges, Alibaba Group Holding and Tencent Holdings are ramping up their investments in AI technology, anticipating a fresh influx of Chinese-manufactured chips from Huawei Technologies and Alibaba's own labs to alleviate supply constraints. Alibaba plans to direct its AI capital expenditure towards cloud services, whereas Tencent is concentrating on meeting internal needs. In the first quarter, Tencent's capital expenditure reached 31.9 billion yuan, marking a 63% increase from the prior quarter. Wu from Alibaba emphasized that every AI card in their service is in use, underscoring the worldwide scarcity of AI chips.
Key facts
- Alibaba and Tencent are increasing AI spending despite revenue misses.
- Alibaba focuses AI capex on cloud services.
- Tencent prioritises internal demand for AI spending.
- Chinese-made chips from Huawei and Alibaba's labs are expected to ease supply bottlenecks.
- Tencent's Q1 capex reached 31.9 billion yuan, a 63% quarter-on-quarter increase.
- Alibaba's Wu said no AI card on their service is idle.
- Both companies face a global shortage of AI chips.
- The spending surge is driven by new domestic chip supply.
Entities
Institutions
- Alibaba Group Holding
- Tencent Holdings
- Huawei Technologies
Locations
- China
- Hong Kong