Despite U.S. chip export restrictions, prominent Chinese technology firms such as Alibaba (NYSE: BABA), Baidu (NASDAQ: BIDU), and Tencent (OTCPK: TCEHY) have significantly increased their investments in artificial intelligence. According to a report by the Financial Times, these companies have more than doubled their capital expenditures on AI compared to last year, emphasizing their commitment to advancing AI infrastructure, particularly for the development of large language models.
In the first half of this year, the combined capital expenditures of Alibaba, Baidu, and Tencent reached RMB 50 billion (approximately $7.02 billion), a notable increase from RMB 23 billion during the same period last year. Alibaba’s investments alone surged to RMB 23 billion, more than double its expenditure from the previous year. Eddie Wu, the Chief Executive Officer of Alibaba, stated in a recent earnings call, “We will continue to invest in R&D and AI capital expenditures to ensure the growth of our AI-driven cloud business. We can anticipate a very high return on investment over the upcoming quarters.”
Similarly, Tencent reported capital expenditures of approximately RMB 23.1 billion for this half-year, markedly up from RMB 8.4 billion in the corresponding period last year. Tencent highlighted in its earnings report that it plans to maintain investments in its platforms and technologies, particularly in AI, to generate new business value and better cater to user requirements.
Baidu has also reinforced its focus on AI, despite experiencing an increase in its cost of revenue attributed to AI-related expenses. The company reported capital expenditures totaling RMB 4.2 billion for the first half of the year, representing a 4% increase over the previous year’s figures.
Since 2022, the United States has implemented various sanctions aimed at restricting the export of advanced artificial intelligence chips and associated technologies to China, which includes Nvidia’s H100 chip and the newly introduced Blackwell series. However, it is worth noting that lower-performance alternatives, such as the H20 chip, remain accessible to Chinese enterprises. This ongoing investment trend by Chinese tech giants illustrates their determination to sustain their AI initiatives in the face of international trade barriers, thereby reflecting a resilient approach to navigating an increasingly complex global technological landscape.
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