Kamal Ghorui
It seems investors’ anxiety about the rise in capital expenditure of companies to fuel their artificial intelligence (AI) infrastructure and strategy has reached China as well. In the past few months, some of America’s biggest technology companies including Amazon, Meta, Google and Microsoft have seen billions wiped out from their market value after they announced an increase in capital expenditure. In a similar case, if not exactly the same, two of China’s biggest technology companies — Alibaba and Tencent — lost $66 billion of value in roughly 24 hours, after the market punished the two companies for failing to lay out clear visions for how to profit off artificial intelligence. Tencent is China’s most-valuable company. According to a report in Bloomberg, “The dramatic reaction reflects investors’ anxiety about the increasing amounts that China’s tech leaders are plowing into data centers, talent hires and model development — without a roadmap to actual revenue.” While the numbers given by Tencent and Alibaba remain a fraction of the $650 billion that the American hyperscalers like Meta Platforms and Amazon are spending this year alone, the rising budgets reportedly coincide with a Chinese consumer downturn that’s compressing margins. Alibaba reported a 67% drop in quarterly net income, exacerbating those concerns.
Investors to Alibaba and Tencent: Show us AI revenue
Alibaba’s US shares fell their most since October, following Tencent’s worst drubbing in almost a year on Thursday, March 19. Investors who had piled into the sector’s biggest names over the past week reversed course after disappointing results, with no clear path to monetization in sight. “Investors are not pushing back on AI spending itself, but on the lack of near-term visibility on monetization,” Bloomberg Intelligence analyst Catherine Lim said. “The key inflection will be when companies can show that AI is driving measurable revenue uplift, whether through cloud, advertising, or transaction conversion. Until then, markets will likely stay cautious.”Tencent is seen as a powerful player to build Agentic AI because it sits on a trove of user data, and has a universe of domestic apps via WeChat. According to the report, Tencent executives fell short of specifics when asked questions on post-earnings calls about how the company would turn its built-in advantages into money spinners. They did not provide the concrete investment targets or specific products that many investors had hoped for.Alibaba too is considered a frontrunner in China’s race toward artificial general intelligence, however, the company is grappling with a slowdown in its core business. Alibaba ended December 2025 with 128,197 employees, down from 194,320 from a year earlier, which is a drop of 60,000-plus. Alibaba is China’s second-largest tech company by market cap. It’s also the most aggressive in terms of spending: It pledged more than $53 billion of AI investment over several years. Alibaba aims to become a full-stack AI company spanning semiconductor manufacturing to computing and AI models. The company this week launched an agentic AI service known as Wukong for businesses, and increased prices for its cloud and storage services by as much as 34% due to rising demand and supply chain costs. Alibaba CEO Eddie Wu said during the earnings call that the company aimed to grow its cloud and AI revenue to over $100 billion annually over the next five years.
