Anticipated AI Boom Fails To Drive Up Cloud Services Spending In China
Portfolio Pulse from Benzinga Neuro
Despite expectations that the AI boom would drive up cloud services spending in China, the reality has been underwhelming. Alibaba (BABA) reported only a 2% YoY revenue growth for its cloud business, and scrapped plans for a public listing of its cloud operations. Huawei and Tencent (TCEHY) did not disclose their cloud revenues. The Chinese cloud market's growth slowed to 10% in 2022, down from 45% in 2021. The U.S. is scrutinizing AI technology, with Nvidia Corp. (NVDA) facing examination for its AI accelerators intended for the Chinese market.
December 27, 2023 | 8:57 am
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NEGATIVE IMPACT
Alibaba's cloud business reported a modest 2% YoY revenue growth and cancelled plans for a public listing of its cloud operations.
The lower than expected revenue growth and the cancellation of the cloud IPO plans could negatively impact investor sentiment and Alibaba's stock price in the short term.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 90
NEGATIVE IMPACT
Nvidia's AI accelerators for the Chinese market are under U.S. government examination, raising concerns over potential restrictions.
The U.S. government's examination of Nvidia's AI accelerators could lead to restrictions that may negatively affect Nvidia's business prospects in China and its stock price.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 70
NEUTRAL IMPACT
Tencent did not disclose their cloud revenues for the third quarter, maintaining market share but contributing to uncertainty in the sector.
Without clear revenue disclosures, it's difficult to assess the direct impact on Tencent's stock, but the overall market uncertainty could have a neutral to slightly negative effect.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50