What happened
Macquarie Group's head of Asia internet and software research, Ellie Jiang, said that Chinese AI companies Z.ai and MiniMax could continue to incur losses through 2030, even as their revenues surge.
The projected losses highlight the substantial costs of competing at the technological frontier, particularly the expense of computing power needed to train and run frontier AI models.
Jiang also noted that China's compute crunch is two to three times more severe, compounding the financial strain on these firms.
Why it matters
This outlook underscores the financial challenges facing Chinese AI startups as they invest heavily in infrastructure to remain competitive globally.
The prolonged unprofitability could affect investor sentiment and the ability of these firms to secure ongoing funding.
Key facts
Z.ai and MiniMax could remain loss-making through 2030.
The losses occur despite surging revenues.
High computing power costs are a major factor.
China's compute crunch is two to three times more severe.
What to watch next
Whether these companies can achieve profitability sooner if compute costs decline or if they find efficiencies.
How sustained losses might impact their competitive positioning and access to capital.