<\/p>\n
Alibaba Group Holding and Tencent Holdings lost $66 billion of market value in roughly 24 hours, after the market punished the twin leaders of China\u2019s tech arena for failing to lay out clear visions for how to profit from artificial intelligence.<\/p>\n
Alibaba\u2019s US shares fell to their lowest since October, following Tencent\u2019s worst drubbing in almost a year on Thursday. Investors that had piled into the sector\u2019s biggest names over the past week \u2014 betting the advent of OpenClaw-style AI agents would galvanize the industry \u2014 reversed course after disappointing results, with no clear path to monetisation in sight.<\/p>\n
The dramatic reaction reflects investors\u2019 anxiety about the increasing amounts that China\u2019s tech leaders are plowing into data centers, talent hires, and model development \u2014 without a roadmap to actual revenue.<\/p>\n
While those outlays remain a fraction of the $650 billion that US hyperscalers like Meta Platforms and Amazon.com are spending this year alone, the rising budgets coincide with a Chinese consumer downturn that\u2019s compressing margins. Alibaba reported a 67% drop in quarterly net income, exacerbating those concerns.<\/p>\n
\u201cInvestors are not pushing back on AI spending itself, but on the lack of near-term visibility on monetisation,\u201d Bloomberg Intelligence analyst Catherine Lim said. \u201cThe 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.\u201d<\/p>\n<\/p>\n
Tencent held steady after shedding $43 billion of market value Thursday. Alibaba\u2019s US-listed shares lost $23 billion overnight, while its Hong Kong stock was down as much as 6.4% in early Friday trade.<\/p>\n
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The market\u2019s about-face stems in part from a burst of exuberance this month, when Chinese consumers returned from their Lunar New Year breaks to fall head-over-heels for OpenClaw \u2014 a viral agentic AI platform that promises to take over a litany of mind-numbing tasks from managing email inboxes to arranging travel itineraries.<\/p>\n
From fledging firms such as MiniMax Group Inc. to incumbents like Baidu Inc., companies scrambled to release apps and services to tap that frenzy, feeding optimism around the technology. Tencent\u2019s shares gained more than 10% at one point earlier this month, riding excitement about its OpenClaw products.<\/p>\n
China\u2019s most valuable firm is considered well-positioned to build agentic AI because it sits on a trove of user data, and controls access to a universe of domestic apps via WeChat. Such services tend to perform best when granted access to users\u2019 information, like message logs.<\/p>\n
But executives fell short of specifics when plied with questions on post-earnings calls about how the company would turn its built-in advantages into money spinners. They didn\u2019t provide the concrete investment targets or specific products that many investors had hoped for.<\/p>\n
\u201cRecent results from Tencent and Alibaba have only added to doubts about the returns and margins from their massive investments,\u201d said Paul Pong, managing director at Pegasus Fund Managers Ltd., who sold Alibaba shares in December last year. \u201cAt the same time, Middle East tensions make it extremely difficult to take advantage of dips in Chinese AI stocks.\u201d<\/p>\n
Morgan Stanley slashed its target price on Tencent by 11% to HK$650. \u201cThese front-loaded AI investments will likely weigh on near-term margins, driving profit to grow more slowly than revenue in 2026,\u201d analysts including Gary Yu wrote.<\/p>\n
In Alibaba\u2019s case, it\u2019s also grappling with a slowdown in its core business.<\/p>\n
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Alibaba is considered a frontrunner in China\u2019s race toward artificial general intelligence. It\u2019s also the most aggressive in terms of spending: it pledged more than $53 billion of AI investment over several years. On Thursday, it declared a target of $100 billion of cloud and AI revenue in five years.<\/p>\n
It\u2019s now keen to monetise a growing AI portfolio in part to counter weakness in its e-commerce division, which is grappling with fierce domestic competition. The company this week launched an agentic AI service known as Wukong for company clients, and hiked prices for its cloud and storage services by as much as 34%.<\/p>\n<\/p>\n
\u201cAt this moment the war in the Middle East is driving funds toward safer investments,\u201d said Vey Sern Ling, a managing director at Union Bancaire Privee. \u201cChina tech companies in a spending phase with high uncertainty of returns is not one of them. Of course the narrative can change quickly if the war ends.\u201d<\/p>\n
Meanwhile, costs are rising on other fronts. Over last month\u2019s week-long Lunar New Year holiday, Alibaba, Tencent, ByteDance Ltd. and Baidu Inc. gave out billions of yuan in coupons to acquire users for their consumer-facing agentic apps.<\/p>\n
\u201cWe do share market concerns around the visibility for Alibaba to reach $100 billion annual cloud and AI revenue in five years,\u201d Barclays Capital Inc. analysts including Jiong Shao write in a note after trimming their target on the firm. The market has \u201cno room for anything less than perfect.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Alibaba #Tencent #shares #lose #66bn #vision #falls #flat<\/p>\n","protected":false},"excerpt":{"rendered":"
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