AI monetization prospects unclear, Alibaba and Tencent combined market value evaporates over 450 billion

Tencent and Alibaba Market Capitalization Decline

Phoenix Technology News Beijing Time March 20 — According to Bloomberg, the combined market value of Alibaba and Tencent evaporated by approximately $66 billion (about 455.4 billion RMB) within about 24 hours, due to these tech giants’ failure to clearly explain how to monetize AI to investors.

Tencent’s stock price hit its worst performance in nearly a year during Thursday’s Hong Kong trading session, followed by Alibaba’s U.S. stock price experiencing its largest single-day drop since October last year. Over the past week, investors have been buying into leading Chinese AI companies, betting that the “Lobster Farming” craze (using the OpenClaw AI agent) will boost the entire industry. However, after disappointing earnings reports and no clear monetization pathways, investors are pulling out.

Tencent’s market cap shrank by $43 billion on Thursday but stabilized on Friday. Alibaba’s U.S.-listed shares lost $23 billion overnight, and its Hong Kong-listed stock dropped as much as 6.4% in early trading on Friday.

How to Monetize?

This sharp market reaction reflects investor anxiety over Chinese tech giants’ increasing investments in data centers, talent recruitment, and model development, which lack clear revenue generation roadmaps.

“Investors are not resisting AI investments per se, but rather the lack of short-term monetization visibility. A key turning point will come when these companies can demonstrate that AI is delivering measurable revenue growth, whether through cloud services, advertising, or transaction conversion rates. Until then, market sentiment may remain cautious,” said Catherine Lim, Bloomberg industry analyst.

The market’s shift in attitude partly stems from a wave of enthusiasm earlier this month. After the Lunar New Year holiday, Chinese consumers showed great enthusiasm for OpenClaw. The platform can handle a range of tedious tasks, from managing email inboxes to planning travel itineraries.

From startups like MiniMax to industry giants like Baidu, companies have rushed to release compatible applications and services to capitalize on this trend, further fueling market optimism about the technology. Tencent’s stock surged over 10% earlier this month, driven by excitement over its OpenClaw product.

However, during a conference call after Tencent’s earnings report, when executives were asked how the company plans to turn its inherent advantages into monetizable projects, they failed to provide specific details. They did not offer many of the investment targets or clear product plans that investors expected.

Morgan Stanley has cut Tencent’s target price by 11% to HKD 650. “These upfront AI investments may pressure short-term profit margins, leading to slower profit growth in 2026 compared to revenue growth,” said Morgan analyst Gary Yu.

As for Alibaba, it is still working to address its core business slowdown. Alibaba is considered a leader in China’s general AI race. It has also been the most aggressive in spending, committing over $53 billion in AI investments over the coming years. On Thursday, it announced a goal: to achieve $100 billion in cloud and AI revenue within five years.

The company is eager to monetize its growing AI product portfolio, partly to offset the weakness in its e-commerce sector caused by fierce domestic competition. This week, Alibaba launched an AI agent called “Wukong” for enterprise clients and raised prices for its cloud and storage services by up to 34%. (Author: Xiao Yu)

(Editors: Wang Zhiqiang HF013)

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