Alibaba, Tencent shed $84 billion after AI vision falls flat

The market punished Alibaba and Tencent for failing to lay out clear visions for how to profit off AI.  Read more at straitstimes.com.

HONG KONG – Alibaba Group Holding and Tencent Holdings bled US$66 billion (S$84.5 billion) of value in roughly 24 hours, after the market punished the twin leaders of China’s tech arena for failing to lay out clear visions for how to profit off artificial intelligence. 

Alibaba’s US shares fell their most since October, following Tencent’s worst drubbing in almost a year on March 19. Investors that had piled into the sector’s biggest names over the past week – betting the advent of OpenClaw-style AI agents would galvanise the industry – reversed course after disappointing results, with no clear path to monetisation in sight.

The dramatic reaction reflects investors’ anxiety about the increasing amounts that China’s tech leaders are plowing into data centres, talent hires and model development – without a roadmap to actual revenue. 

While those outlays remain a fraction of the US$650 billion that US hyperscalers like Meta Platforms and Amazon.com are spending this year alone, the rising budgets coincide with a Chinese consumer downturn that’s compressing margins. Alibaba reported a 67 per cent drop in quarterly net income, exacerbating those concerns.

“Investors are not pushing back on AI spending itself, but on the lack of near-term visibility on monetisation,” Bloomberg Intelligence analyst Catherine Lim said. “The key inflection will be when companies can show that AI is driving measurable revenue uplift, whether through cloud, advertising, or transaction conversion. Until then, markets will likely stay cautious.”

Tencent’s Hong Kong shares were down 0.5 per cent on March 20 after shedding US$43 billion of market value in New York on March 19. Alibaba’s US-listed shares lost US$23 billion overnight, while its Hong Kong stock was down 5.8 per cent on March 20.