Chinese Internet Giants to Capture AI Profits in 2-3 Years as Pricing Power Shifts
Updated
Updated · South China Morning Post · Sep 2
Chinese Internet Giants to Capture AI Profits in 2-3 Years as Pricing Power Shifts
1 articles · Updated · South China Morning Post · Sep 2
Summary
UBS said Chinese internet platforms should start capturing a larger share of AI profits within 2 to 3 years, despite current investor caution over heavier spending.
The bank expects pricing power to move from upstream hardware and infrastructure providers to downstream platforms once capacity constraints ease, favoring companies with data, users and distribution.
Kenneth Fong, UBS’s head of China internet research, said weak macro conditions in the second half have made investors wary because rising AI investment is likely to pressure near-term earnings.
Chinese tech giants have already ramped up capital expenditure over the past quarter to build AI capacity, sacrificing free cash flow in the process.