ByteDance’s First-Half Profit Drops to $20 Billion, Weighed Down by AI Spending

ByteDance’s net profit in the first half of this year declined by a single-digit percentage to $20 billion, as the Chinese tech giant ramped up its investments in AI, according to three people with knowledge of the financial results.

The company’s revenue for the period rose around 30% year on year to $120 billion, driven partly by robust growth of its international advertising and e-commerce revenue from TikTok, the people said. That suggests ByteDance’s growth rate is accelerating marginally from its rate of expansion in the past two years. ByteDance’s revenue grew 29% last year to about $200 billion, the people said, following a similar rate of growth in 2024. The company’s net profit grew 27% to $42 billion last year.

The numbers also suggest ByteDance is keeping pace with Meta Platforms, whose revenue grew 30% in the first half of the year to $117 billion. That spotlights a vast valuation gap between the two companies, as Meta’s market capitalization is $1.7 trillion, whereas ByteDance’s valuation is estimated at $630 billion, according to CapLight, which tracks secondary market transactions.

The first-half numbers also indicate that the TikTok deal in January with the U.S. government has provided a boost for the company. ByteDance sold a 80% stake in TikTok’s U.S. data security operation to an American-owned joint venture in January, while retaining the app’s revenue-generating operations.

In the wake of the U.S. deal, The Information reported that TikTok was redoubling its efforts to build a bigger e-commerce business in the U.S. with a new program to attract established brands to TikTok Shop.

While Douyin continues to contribute the lion’s share of ByteDance’s revenue, overseas revenue, the majority of which came from TikTok, accounted for more than 30% of the total, according to one of the three people with knowledge of the financial results. TikTok’s weight in ByteDance’s overall revenue has been increasing steadily. The percentage of overseas revenue was 30% in 2025 and 25% in 2024.

ByteDance’s overall profit decline shows how AI spending is weighing down the once cash-printing company. The largest Chinese tech company by revenue, ByteDance develops its own large language and video models and operates China’s most popular mobile chatbot app, Doubao. It is expanding its AI cloud business to sell its models to enterprise customers. Its Seedance video-generation models are among the global leaders in the AI video market.

While securing access to existing advanced chips, the company has also been developing its own inference chip for running AI models, The Information reported in May. ByteDance recently borrowed about $30 billion from banks in its largest-ever loan, which could help finance its soaring AI investments.

ByteDance’s biggest domestic competitors are also raising money to finance their AI bets. Alibaba is looking to raise about $10 billion through a major share placement to fund its AI infrastructure spending. Zhipu AI, also known as Z.ai, on Sunday kicked off $5 billion in equity and convertible bond offerings to fund its AI spending.

ByteDance faces intense competition from domestic rivals. Over the past several months, new Chinese open-source models from Moonshot, Alibaba, Z.ai and DeepSeek have surged to global prominence, offering near-frontier capabilities in coding and agentic tasks at a fraction of the cost of leading U.S. models. Meantime, ByteDance is falling behind.

While many AI labs in China use outputs from U.S. frontier models to train their own models in a practice known as distillation, ByteDance founder Zhang Yiming stated in an internal meeting in July that the company won’t resort to distillation—even if that means it temporarily lags behind domestic rivals. The company is also the only major Chinese model maker that has kept the vast majority of its models proprietary, and enterprise customers access them mainly from its own cloud platform, whose market share trails that of Alibaba Cloud, Asia’s biggest cloud provider.

ByteDance is hoping the popularity of its Seedance video models will bring in more revenue for both its AI and cloud businesses, according to one of the people with knowledge of its financial results. In another effort to increase its AI revenue, ByteDance in June launched Doubao Work, a workplace AI assistant for professional users that offers paid subscription plans.