China’s Alibaba is set to showcase its artificial intelligence strategy in its quarterly results, following billions of dollars invested in AI over the past three years. However, monetizing these efforts has been challenging due to Chinese users’ resistance to paid models.

Alibaba’s AI push has not significantly contributed to its growth, impacting its e-commerce business amid intense price competition. Analysts estimate its cloud business revenue, including AI products, grew just 4.3% in the April-June quarter, suggesting slowing growth at 31.4 billion yuan.

Tencent and Baidu also face challenges in monetizing AI investments, with revenue growth from AI services slower than expected. Baidu’s subscription model for its chatbot failed to gain traction, highlighting the difficulty of user-paid models in China compared to the U.S.

Facing consumer subscription challenges, Chinese AI developers are shifting towards enterprise customers with API services. The intense competition has led to a price war, with companies like Alibaba and ByteDance slashing API prices significantly to remain competitive.

Despite revenue challenges, companies argue that AI investments improve their offerings and operational efficiency. Analysts believe the long-term commercial potential of AI is high, even if direct revenue uplift is challenging in the short term. Alibaba is expected to report a 4% increase in quarterly revenue on Friday.

Read more at Yahoo Finance: Alibaba results likely to show limited AI payoff for China tech