by YANG Yi

ByteDance's net profit fell more than 70% in 2025 as a sharp rise in artificial intelligence spending eroded margins despite revenue growth, a person familiar with the matter said.

The drop was driven by heavy spending in the second half, as the company increased spending on AI chips, model development and computing infrastructure to support training and inference for its large language models.

Revenue grew, with domestic sales up about 20% and overseas revenue nearly 50% higher. Overseas revenue accounted for more than 30% of total revenue, up from 25% in 2024. Growth in TikTok's e-commerce operations helped drive overseas expansion and profitability, the source said.

ByteDance has told shareholders it will further increase technology investment in 2026, alongside additional compliance costs in overseas markets, suggesting continued pressure on margins. Media reports have said total capital expenditure will keep rising, with more than half allocated to AI processors and related infrastructure.

ByteDance did not respond to a request for comment.

Analysts say the move mirrors broader industry trends, as China's leading internet firms ramp up AI spending to compete with global peers while accepting weaker near-term returns.

Public data show U.S. tech giants each spent more than $70 billion on AI in 2025, while OpenAI's capital expenditure reached about $45 billion, exceeding the scale of individual Chinese companies.