<div id="readability-page-1">Artificial intelligence investments by US tech giants continue to soar, dwarfing those of Chinese AI firms, but China’s rising appetite for AI applications will compel its tech companies to increase their AI spending this year, according to analysts. The largest US tech companies are on track for more than US$700 billion in AI capital expenditures this year, driven in part by rising memory costs and continuously growing demand for AI applications. Google and Microsoft on Thursday both said that their full-year capex would reach about US$190 billion, while Meta Platforms raised its capex estimates for this year to US$145 billion. Amazon kept its outlook unchanged from last year at US$200 billion. AI spending by Chinese tech firms represented a fraction of the US level, according to analyst estimates. Chinese cloud service providers would likely spend US$105 billion this year, according to a Morgan Stanley research report last week. Last year, the AI capex of China’s internet giants stood at 400 billion yuan (US$59 billion), about a tenth as much as their US peers, said Wei Xiong, UBS China internet industry analyst, in a report in December. Despite this “prudent” spending, Chinese firms had developed large AI models of similar calibre to those from the US, Xiong added. “China’s AI investment scale can’t be directly compared to that of US hyperscalers as proof that it’s not investing enough in computing power, and it certainly doesn’t mean the ‘good enough’ cost-effective Chinese models are not generating comparable business returns on the market,” said Tilly Zhang, China technology and industrial policy analyst at research firm Gavekal. Faced with restrictions on purchasing the most advanced and expensive US chips for AI training and commercial use, Chinese firms have relied more on software and algorithm improvements, she said. Chinese tech companies’ progress in commercialising their AI platforms would drive increased spending this year, according to Morgan Stanley, which expected AI-related capex this year by China’s biggest internet platforms, including Tencent Holdings, Alibaba Group Holding, ByteDance, Baidu, Meituan and Kuaishou, to increase 38 per cent from a year earlier to 597 billion yuan.  The expansion would be supported by “clear monetisation pathways” across advertising, consumer and enterprise AI applications, the investment bank said. Zhang added that new applications such as OpenClaw, the AI agent that triggered a frenzy in China earlier this year, had fuelled an increase in token consumption, incentivising Chinese AI firms to increase their computing power. “Chinese companies’ AI capex plans are still much more practical, based on real commercial demand, but now it has reached a point where the market requires more capex spending,” Zhang said. If computing power capacity was not a constraint, there would be higher than expected AI capex in China, said Chelsey Tam, Morningstar senior equity analyst. Tencent last month pledged to double its investment in AI products and models to 18 billion yuan this year. ByteDance, operator of TikTok and its Chinese version Douyin, planned to spend about 100 billion yuan on AI chips from Nvidia this year, up from roughly 85 billion yuan in 2025, it said in December. Alibaba in September last year announced plans to boost its AI infrastructure spending beyond the US$53 billion over three years that it pledged earlier, but it did not disclose the amount of additional investment. Alibaba owns the South China Morning Post. </div>

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<p>Chinese tech firms are under pressure to increase AI investments as US companies' spending soars, projected to exceed $700 billion this year. Google and Microsoft plan to spend around $190 billion each, while Meta and Amazon also report significant capex. In contrast, Chinese firms are expected to invest $105 billion, a fraction of the US total. Despite lower spending, Chinese companies have developed competitive AI models. Analysts predict a 38% increase in AI capex among major Chinese internet platforms, driven by commercial demand and new applications.</p>

- US technology companies are projected to spend over US$700 billion on AI capital expenditures in 2026, significantly higher than Chinese firms, whose projected spending is US$105 billion.  
- Chinese internet giants are expected to increase their AI-related spending by 38% to 597 billion yuan this year, driven by new applications and commercial demand.  
- Analysts note that Chinese firms have developed competitive AI models despite lower investments and are incentivized to enhance computing power to meet market requirements.

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Chinese firms face pressure on AI investments as US peers’ spending soars