ByteDance Ltd. is ramping up its already substantial investment in artificial intelligence (AI) infrastructure, planning to spend $23 billion in 2026 as China's tech giants race to close the gap with U.S. rivals. The move comes as global investors increasingly shift their focus toward Chinese AI companies amid growing concerns about a speculative bubble in Wall Street's AI sector.
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The Beijing-based company, which owns TikTok, has drawn up preliminary plans to spend about 160 billion yuan ($23 billion) in capital expenditure in 2026, up from roughly RMB150 billion invested in AI infrastructure this year, the Financial Times (FT) reported Monday, citing two people with knowledge of the matter. About half of the planned spending would go toward acquiring advanced semiconductors to support the development of AI models and applications.
ByteDance has budgeted around RMB 85 billion for AI processors in 2026, despite uncertainty over its access to Nvidia Corp. chips due to U.S. export controls, according to the FT. The company could significantly increase its capital expenditure (Capex) if restrictions on buying Nvidia's H200 processors are eased, while it also continues to lease overseas datacenters to access advanced hardware for training AI models.
The investment underscores ByteDance's ambitions to be a global leader in AI infrastructure, though its spending remains far below that of U.S. Big Tech groups, which have collectively invested more than $300 billion this year, the FT reported.
Bloomberg last Friday reported that ByteDance is on track to post ruoghly $50 billion in net income for 2025 with its revenue approaching that of Meta Platforms Inc. The company was reported in May that it had targeted approximately $186 billion in revenue for 2025, representing about 20% growth for the year.
China's AI Spending Surge
Goldman Sachs estimated the gap between China and the U.S. in AI has narrowed to "3-6 months," with smartphones powered by ByteDance's Doubao AI Assistant indicating a shift in application traffic patterns. The investment bank expects Capex of China's hyperscalers to rise to RMB500 billion by 2026, a 20% increase compared to the estimated over RMB400 billion in 2025. The proportion of domestic chips and computing power is expected to significantly accelerate with a growth rate of 40% in 2026, up from 20%-30% in 2025.
Chinese groups have been hamstrung by U.S. export controls that prevent them from buying Nvidia's market-leading chips. That has led companies such as ByteDance and Alibaba to create cheaper and more efficient models that require less computing power. U.S. President Donald Trump lifted a ban earlier this month for Nvidia to sell its H200 processor, a less powerful chip than its most cutting-edge hardware, to "approved customers in China." Those sales could still be hampered by opposition from some Washington lawmakers and Chinese authorities.
ByteDance plans to buy 20,000 H200s in a test order, which could cost about $20,000 per unit, FT cited one person familiar with its plans. The company also continues to spend billions on leasing data centers overseas, where it can legally access the most advanced hardware from Nvidia to train AI models and service clients outside China. The rental agreements are typically not counted as capital expenditure but as operating costs.
Dominant Position in Consumer AI
While the performance of ByteDance's open-source Doubao models lags behind local rivals such as Alibaba's Qwen and DeepSeek on independent benchmarks, the company is dominant in consumer-facing AI applications. Its Doubao chatbot surpassed DeepSeek to become the most popular in China in terms of monthly active users and downloads, according to local data analytics firm QuestMobile. The company is also fiercely competing with Alibaba by pushing its Volcano Engine cloud offering to businesses.
These products have contributed to ByteDance's AI services becoming the most used in China, according to Goldman Sachs. The investment bank's analysts found that, in October, ByteDance saw a substantial increase in its daily token usage — a measure of how much consumers use AI services — to more than 30 trillion. This compares with Google's 43 trillion for the same month.
Global Investors Eye Chinese AI
Global investors are increasing their wagers on Chinese artificial intelligence companies, betting on the next DeepSeek and seeking to diversify, with concerns growing about a speculative bubble in the sector on Wall Street. Foreigners see China closing the tech gap with the U.S. as Beijing steps up support for AI chipmakers, spurring bets on Chinese companies just as worries grow over lofty valuations on U.S.-listed AI stocks.
Britain-based asset manager Ruffer said it has "deliberately limited exposure" to the Magnificent Seven — the U.S. tech giants — and is looking to add positions in Alibaba for bigger exposure to China's AI theme. UBS Global Wealth Management this month rated China tech as "most attractive," citing investors' search for geographical diversification and China's "strong policy backing, technological self-reliance, and rapid AI monetization."
"Compared with other Chinese big techs such as Alibaba and Tencent, ByteDance has the advantage of not being a public company, which allows it more flexibility to invest aggressively and play the long game in AI," said a ByteDance investor quoted by the FT. ByteDance did not respond to requests for comment.
