Macquarie: Chinese AI startups face prolonged losses amid compute crunch
Macquarie Group predicts that Chinese AI firms Z.ai and MiniMax will continue to lose money through 2030, despite rapid revenue growth. The high cost of computing power, exacerbated by US restrictions on advanced Nvidia chips, is a key factor. The investment bank remains conservative in its estimates even as annual recurring revenue is expected to surge.
Macquarie's Ellie Jiang noted that the domestic shortage of advanced computing power is two to three times more severe than the global average, driven largely by export controls on high-end Nvidia processors. This hardware constraint is a primary factor behind the projected unprofitability for Z.ai and MiniMax through the end of the decade.
Despite the bleak profitability outlook, the investment bank anticipates substantial revenue expansion. Macquarie's own forecast for Z.ai's annual recurring revenue is roughly $3 billion, which actually exceeds the company's internal target of $2.4 billion for the year, indicating strong uptake among paying users and businesses.
Prolonged losses at leading Chinese AI firms could reshape the domestic tech landscape. Investors may become more cautious about funding speculative ventures, potentially slowing innovation or forcing consolidation among smaller developers. Enterprises relying on these models could face higher service costs or delayed feature rollouts as companies struggle to balance expensive compute needs with profitability. Sustained revenue growth might attract alternative funding, though the persistent hardware gap could keep the sector dependent on domestic chip alternatives.