{
  "id": 4984361,
  "title": "Chinese internet giants set to reap artificial intelligence profits in 2 to 3 years: UBS",
  "url": "https://urgent.news/2026/09/02/chinese-internet-giants-set-to-reap-artificial-intelligence-profits",
  "topic": "ai",
  "section": "AI",
  "published": "2026-09-02T01:30:10.000Z",
  "source": {
    "name": "SCMP Tech",
    "slug": "scmp-tech",
    "url": "https://www.scmp.com/tech/big-tech/article/3366018/chinese-internet-giants-set-reap-artificial-intelligence-profits-2-3-years-ubs"
  },
  "original_language": "en",
  "account": "Chinese internet giants anticipate capturing a larger portion of artificial intelligence profits within two to three years, despite temporary investor caution due to macroeconomic challenges, according to UBS analysts. UBS's Kenneth Fong, who heads their China internet research, explained that the industry's power dynamics are poised to shift soon, as capacity constraints currently limit upstream profits. Once these constraints ease, the downstream sector, where internet companies hold distribution capabilities, data, and users, will see increased pricing power. To bolster their AI capabilities, Chinese tech firms have been increasing their capital expenditures, even if it means sacrificing short-term free cash flow. For instance, Tencent Holdings nearly tripled its capex in the second quarter to 52.8 billion yuan, while Alibaba Group Holding witnessed a more than doubling of its free cash outflow to 44.7 billion yuan. However, US technology companies spent seven times more on AI compared to their Chinese counterparts, mainly due to restricted access to advanced foreign chips and smaller scale operations. Chinese firms have adopted a cautious yet strategic approach to AI spending, investing one to one-and-a-half years' worth of annual cash flows while drawing from one year's cash flows to ensure they remain competitive. Despite potential AI failures, UBS analyst Xiong Wei noted that Chinese developers maintain healthy gross margins and cost efficiency, as training costs for Chinese models are estimated to be less than 10% of global leaders, and average API prices are less than 20% of their global counterparts. This cost advantage allows Chinese developers to stay profitable, as they utilize technological innovation to improve efficiency without burning cash on adoption.",
  "summary": "Internet platforms with vast data and large user bases will capture a larger share of artificial intelligence profits in two to three years, even though macro headwinds have temporarily fuelled investor caution over aggressive AI spending by Chinese tech giants, UBS analysts said. Investors have been cautious over a weak macro environment in the second half of the year, and greater AI spending…",
  "key_points": [
    "Chinese internet giants expect AI profit share in 2-3 years",
    "Tencent and Alibaba increase AI investments despite cash flow strain",
    "Chinese AI developers enjoy cost advantage over US counterparts"
  ],
  "editors_take": "Chinese internet giants are set to gain from artificial intelligence as easing capacity constraints shift power dynamics in their favour, boosting their pricing power and profits downstream.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}