{"id":2337,"date":"2025-12-07T14:18:22","date_gmt":"2025-12-07T14:18:22","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/chinese-internet-tech-ramp-up-ai-spend-who-could-benefit\/"},"modified":"2025-12-07T14:18:22","modified_gmt":"2025-12-07T14:18:22","slug":"chinese-internet-tech-ramp-up-ai-spend-who-could-benefit","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/chinese-internet-tech-ramp-up-ai-spend-who-could-benefit\/","title":{"rendered":"Chinese internet tech ramp up AI spend. Who could benefit"},"content":{"rendered":"\n<div>\n<div data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\">\n<p><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"xyz-data\">Chinese internet companies don&#8217;t have enough compute to power their artificial intelligence ambitions \u2014 and they aren&#8217;t about to buy Nvidia outright. That&#8217;s a key takeaway from the latest earnings season. Alibaba reported cloud-related revenue surged by 34% year-on-year to the equivalent of $5.6 billion. Management said demand was outstripping supply, and indicated they might need to spend more than the 380 billion yuan ($53.74 billion) initially earmarked for AI buildout over the next three years. That sets up China&#8217;s domestic computing power industry for a &#8221; turning point ,&#8221; Citic analysts said following Alibaba&#8217;s earnings. They expect other cloud vendors in China will likely follow Alibaba in spending more on AI compute. Chinese tech companies don&#8217;t explicitly disclose which chip suppliers they are working with. They are officially barred by the U.S. from accessing Nvidia&#8217;s most advanced semiconductors, while homegrown alternatives such as Huawei or tech companies&#8217; in-house solutions aren&#8217;t publicly traded. But analysts are watching a handful of mainland-traded Chinese stocks as potential beneficiaries. &#8220;Higher AI spend should initially benefit AI-related equipment infrastructure firms,&#8221; said Brian Tycangco, analyst at Stansberry Research. One of his expected chip beneficiaries is Shanghai-listed Cambricon, whose revenue surged by more than 4,000% in the first half of the year from a year ago. The stock has more than doubled in price this year. Goldman Sachs also rates Cambricon a buy, with a price target of 2,104 yuan. That&#8217;s 55% above where the stock closed Friday. &#8220;We expect leading domestic Semiconductor Production Equipment (SPE) players and high-end semiconductor suppliers with significant technological moats to benefit as domestic supply and demand increase,&#8221; the Goldman Sachs analysts said in a report Thursday. Bloomberg on Thursday reported, citing sources, that Cambricon plans to triple its output next year to fill the demand gap. The Chinese company did not immediately respond to a request for comment. It has denied the report, according to Wind Information. Other than Cambricon and Huawei, Shanghai-listed Hygon makes HSBC&#8217;s list as China&#8217;s alternatives to Nvidia, AMD and Qualcomm for AI chip design. Also fresh to the Chinese market is graphics processing unit maker Moore Threads, which surged more than 400% in its debut Friday in Shanghai. In a sign of Beijing&#8217;s support, regulators had approved the company&#8217;s IPO application just 88 days after accepting it. Tencent and ByteDance were one of the many early-stage investors in Moore Threads, according to PitchBook. If there weren&#8217;t restrictions on AI chips, &#8220;then our cloud revenue should be growing more quickly,&#8221; Tencent management said in their latest earnings call. Media reports this week indicate the U.S. government remains divided on whether to let Nvidia sell advanced chips to China. &#8220;We do worry about onshore GPU capacity as a constraint on [China] AI deployment in 2026 \u2014 issues like latency means using offshore compute (often utilised for training) is impractical for deployment at scale,&#8221; Bernstein analysts said in a report Friday. &#8220;But with fab capacity increasing into 2027,&#8221; the analysts said, &#8220;both our discussions with our Bernstein semis colleagues and those with execs at the companies point to this becoming a problem that&#8217;s on its way to being resolved.&#8221; Some Chinese companies are already making money from generative AI and plan to spend more on the business. Kuaishou said last month it expects full-year revenue for its video generation product Kling AI to reach $140 million, far exceeding the $16 million target set at the beginning of 2025. &#8220;We have recently started to [scale] up Kling AI&#8217;s training computer power to keep Kling AI at the forefront of technology advancement,&#8221; management said on an earnings call, according to a FactSet transcript. Kuaishou expects total capex for the year to increase by mid to high double-digits from 2024. The HSBC analysts on Wednesday said they still prefer Chinese AI components players that have exposure to overseas supply chains as well, such as Innolight. &#8220;As the global No 1 supplier of optical modules, Innolight directly benefits from the booming demand for 1.6 [trillion] optical modules,&#8221; the analysts said. They pointed out that whether Google&#8217; s tensor processing unit approach to data centers or the graphics processing unit approach by Nvidia, both generate high demand for optical modules. After Google&#8217;s Nano Banana Pro launch HSBC said optical module stocks&#8217; consensus earnings estimates in mainland China were revised up. HSBC has a price target of 651.20 yuan, or more than 20% upside from Friday&#8217;s close. \u2014CNBC&#8217;s Michael Bloom contributed to this report.<\/span><\/span><\/span><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Chinese internet companies don&#8217;t have enough compute to power their artificial intelligence ambitions \u2014 and they aren&#8217;t about to buy Nvidia outright. That&#8217;s a key takeaway from the latest earnings season. Alibaba reported cloud-related revenue surged by 34% year-on-year to the equivalent of $5.6 billion. Management said demand was outstripping supply, and indicated they might [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2338,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[2342,270,2340,2341,1361,617],"class_list":["post-2337","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-benefit","tag-chinese","tag-internet","tag-ramp","tag-spend","tag-tech"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=2337"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2337\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/2338"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=2337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=2337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=2337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}