Alibaba and Tencent Signal AI Spending Surge as Local Chips Ramp Up
Chinese technology giants Alibaba and Tencent said they will significantly increase artificial intelligence infrastructure spending despite earnings pressure. The two firms continue to place strong orders with domestic chip suppliers as US export controls weigh on access to advanced foreign hardware.
After softer revenue growth in their March-quarter results, Alibaba and Tencent told investor briefings that they will aggressively step up AI capital spending. Both groups are aiming for data-centre capacity closer to hyperscaler scale.
With US export controls on advanced chips in place, Chinese tech firms are leaning on local suppliers such as Cambricon, Huawei's Ascend line and memory maker CXMT. Chinese semiconductor stocks rallied in Shanghai and Shenzhen after the news.
SCMP notes that the higher spending is likely to weigh on near-term margins, but is intended to strengthen China's home-grown AI ecosystem over the medium term. Investors are watching for management guidance on margins in the next quarter.
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