Oil prices steady near 1-mth high on US-Iran sanctions; OPEC+ meeting awaited
Investing.com -- China’s biggest cloud service providers are closing the gap with their US counterparts in artificial intelligence and cloud infrastructure spending, Jefferies said.
The four leading Chinese firms spent about $45 billion in the past 12 months, compared with $291 billion by the top US players.
While the difference in absolute terms remains large, Jefferies said Chinese companies have accelerated their investments since early 2023, with spending growth outpacing the US every quarter since late last year.
In the June quarter, combined capital expenditure at Baidu, Alibaba and Tencent surged 168% from the prior period, with Alibaba and Baidu reporting gains of 57% and 30%, respectively.
Tencent was the only one of the group to post a sequential decline. The increase came despite earlier expectations that investment would be muted as companies secured chips through rental markets following tighter US export controls.
Jefferies noted that Chinese firms have already surpassed US peers in the ratio of cloud-related investment to cloud revenue, at 121% in the June quarter versus 94% for US companies.
While overall spending as a share of total revenue remains lower in China, that figure has been rising more quickly.
The bank said Chinese providers are investing heavily not only in AI, but also in general-purpose servers to support broader internet services, suggesting gains could show up in their core businesses rather than just third-party cloud offerings.
Although smaller scale, tighter regulation and geopolitical limits hold back China’s expansion, Jefferies argued that the country’s emphasis on efficiency and commercialization could spur faster adoption of AI applications domestically.