(Yicai) March 26 -- Kuaishou Technology’s shares tumbled after the Chinese short-video platform’s plans for heavier capital expenditure, largely on artificial intelligence, eclipsed its announcement of 21 percent profit growth last year.

Kuaishou [HKG: 1024] closed down 14 percent at HKD45.60 (USD5.80) in Hong Kong today. The shares have halved in value since reaching a 52-week high of HKD92.60 on Oct. 2.

Capex is expected to be about CNY26 billion (USD3.76 billion) this year, roughly CNY11 billion higher than last year, Chief Financial Officer Jin Bing said on Kuaishou’s earnings call with analysts. The increase will mainly fund computing power investments for its Kling AI and other foundation models, servers for offline storage and processing, and data/computer-center construction.

Technology stocks have generally taken a beating after recent earnings releases, said Jacky Sze, chief investment officer at Blue Water Capital Management. In Kuaishou’s case, investors are mainly concerned about the sharp increase in capex, much of which will be directed toward AI, while the return on this investment remains uncertain.

Chief Executive Cheng Yixiao said Beijing-based Kuaishou is confident about more than doubling this year’s revenue from Kling AI, a powerful video generator.

In the 12 months ended Dec. 31, net profit climbed 21 percent to CNY18.6 billion (USD2.7 billion), while adjusted net rose 17 percent to CNY20.6 billion, the company’s financial report showed late yesterday. Revenue rose almost 13 percent to CNY142.8 billion (USD20.6 billion).

That was not a weak performance, said Cen Zhiyong, an analyst at Wutong Research Institute, but investors have high expectations for tech companies and remain concerned about Kuaishou’s long-term growth prospects.

The firm’s share price mirrors the recent trend among other Hang Seng Tech Index constituents such as Tencent Holdings and Alibaba Group Holding, which have also weakened following earnings releases, said Ronald Wan, chief executive of Partners Capital International.

In the short term, share prices may face selling pressure as positive catalysts fade, Wan added. Over the past year, the rebound in Hong Kong tech stocks has largely been driven by AI bets and valuation recovery, with markets having already priced in strong growth expectations for 2025 and 2026.

Kuaishou’s annual revenue from online marketing services rose 13 percent to CNY81.5 billion, largely driven by faster adoption and innovative uses of AI across multiple marketing scenarios. Live streaming revenue rose 6 percent to CNY39.1 billion, while that from other services jumped 28 percent to CNY22.2 billion, supported by growth in e-commerce and Kling AI.

Fourth-quarter net profit jumped 32 percent to CNY5.2 billion (USD757 million), while adjusted net increased 16 percent to CNY5.6 billion, the earnings report also showed. Revenue rose 12 percent to CNY39.6 billion from a year ago.

The quarterly figures slightly exceeded expectations, Huatai Securities said. But commission and advertising revenue growth may slow noticeably this year, as live-streaming content is cleaned up, while profit is likely to come under pressure from AI spending, it added.

Editor: Emmi Laine