AI applications will increase due to the significant price reduction of LLM in CN. BIDU/BABA/TENCENT's Cloud Biz Rev. can benefit from financial news

Morgan Stanley released a report highlighting that falling prices of large language models (LLMs) in China are leading to an increase in AI applications and increasing AI use cases. The broker predicted that cloud revenues of BIDU-SW (09888.HK), BABA-SW (09988.HK) and TENCENT (00700.HK) may benefit, while smaller startups may be affected.

According to a report, Alibaba Cloud will reduce the prices of nine of the Tongyi Qianwen series of commercial and open source LLMs on May 21, reducing the price of the main model (benchmarked to OpenAI's GPT-4) by $97 announced. %. A few hours later, Baidu AI Cloud followed suit, announcing that two of its main models, Ernie Speed ​​and Ernie Lite, would be available for free. The next day, Tencent Cloud also reduced the price of his LLM and announced that Hunyuan Lite would be free immediately.

related newsG Sachs cuts BIDU-SW (09888.HK) price target to $150 after first-quarter profit beats expectations
According to the brokerage, BABA management attributes the price reduction to Alibaba Cloud's economies of scale and technology advantages. Driven by the rapidly expanding demand for AI, BABA's AI-related cloud revenue achieved triple-digit growth in the most recent quarter.

Morgan Stanley now expects BABA's cloud revenue growth to re-accelerate to double digits in FY02/25 due to a recovery in its public cloud business and increased contribution from AI. From a profitability perspective, the company expected EBITA margin to remain in the low single digits in FY2025, compared to 5.6% in Q4 2024.

related newsCICC: Top 20 active asset managers by CN stock holdings increase H-share holdings by 2.5%; large long positions in seven new stocks; MEITUAN and TENCENT lead purchases

AAStocks Financial News