In the rapidly evolving world of technology, companies that are associated with buzzwords like ChatGPT, generative AI, and large models often evoke thoughts of immense profitability and endless potentialHowever, the stark reality can be quite differentTake SenseTime, a leading Asian AI technology firm, for instanceAfter suffering losses of nearly 50 billion yuan over six years, the first half of 2024 saw the company incur an additional loss exceeding 2 billion yuanThe question arises: what has happened to SenseTime?

Founded in 2014 by Professor Tang Xiaoguo, SenseTime has established itself as a front-runner among China's "AI four dragons." Prior to going public, the company was one of the hottest prospects in the AI sector, attracting substantial investmentWhen it listed on the Hong Kong stock exchange on December 30, 2021, its highest market valuation reached an impressive 320 billion HKD.

Despite this enviable position, SenseTime faced persistent losses leading up to its IPOThe anticipation surrounding its profitability was highThe strategic moves made by the company included capitalizing on the burgeoning interest in the metaverse and then pivoting towards generative AIYet, losses persisted.

As of 2020, according to its prospectus, SenseTime claimed to be the largest AI software company in Asia and the largest computer vision software firm in China, with an 11% market shareThe company boasts four major segments: smart commerce, smart cities, smart living, and intelligent vehicles.

The year 2021 was proclaimed as the inaugural year of the metaverse, a sparkling concept wherein AI plays a crucial role in its developmentThis excitement was reflected in SenseTime’s communications, with 'metaverse' becoming a frequent reference in their annual reports.

For instance, the company highlighted the significant role of its SenseMARS mixed-reality platform within its smart living segment

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They even spoke about the formation of a digital space business group aimed at integrating their advantages in AI perception, augmented reality (AR), mixed reality (MR) technology, and computing power to create an industry-leading metaverse empowerment platform.

However, as interest in the metaverse began to wane, references to it in the 2022 annual report noticeably diminishedBy 2023, terms like 'metaverse' and 'SenseMARS' had faded from the company’s reports completely.

In the aftermath of the metaverse hype, generative AI emerged as SenseTime’s new focal point.

In its 2023 performance announcement, SenseTime showcased the advantages and breakthroughs it had achieved in the realm of generative AIThey claimed that the generative AI business saw the fastest growth since the company’s inception, achieving a revenue surpassing 1 billion yuan.

The company decided to undergo a significant restructuring, consolidating its previously distinct segments of smart commerce, smart cities, smart living, and intelligent vehicles into three new business units: generative AI, traditional AI, and intelligent vehicles.

Generative AI became the crown jewel of the reinvigorated lineup, with high expectations riding on its potential to pull the company into profitability.

Looking ahead to 2024, SenseTime announced plans to accelerate the commercialization of generative AI and deepen its market penetration, prioritizing resources towards this segment to enhance cash flow and mitigate losses while driving profitability in its core businesses.

It’s clear that SenseTime has positioned generative AI as the vanguard of its profitability strategy, hoping that success in this area will catalyze broader financial recovery.

The first half of 2024 revealed a remarkable uptick in the generative AI sector, where revenue soared to 1.051 billion yuan, a staggering 256% increase year-on-year, now making up 60% of the company's total revenue and establishing itself as the leading business unit.

SenseTime’s Chairman and CEO Xu Li stated, “The mid-year performance reflects that our strategic goal of a full-scale transition towards generative AI has been gradually achieved

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In the future, we will relentlessly innovate technology and lead the industry into the era of general artificial intelligence (AGI).”

The generative AI segment primarily includes large models and intelligent computing servicesSince the release of their daily-updated model, over 3,000 top-tier companies across various industries have subscribed to SenseTime’s services, with usage of the model skyrocketing by 400% in the first half of 2023.

When examining the other segments, traditional AI generated 520 million yuan, reflecting a 50.6% drop, as the group deliberately narrowed its focusIn contrast, the intelligent vehicle sector saw a 100% growth in revenue, totaling 170 million yuan during the same period.

While the ascendance of generative AI can be seen as a key turning point, whether it will be sufficient to propel SenseTime into profitability remains uncertain.

In the first half of 2024, the company recorded a net loss attributable to equity holders of 2.457 billion yuan, a decrease compared to the 3.123 billion yuan loss during the same period the previous yearAccording to data from Tonghuashun, SenseTime accumulated a staggering net loss of 50 billion yuan over six years from 2018 to 2023.

This ongoing financial struggle has been cited as a significant factor affecting the company's performance in secondary market evaluations.

Following its December 2021 IPO, SenseTime's shares saw a surge followed by a sharp decline, entering a downtrend just six months after launchingSignificant shareholders like SoftBank and Alibaba began cashing out after their shareholdings were released from restrictionsAs of August 30, 2024, SenseTime's total market valuation stood at 41.4 billion HKD (approximately 37.6 billion CNY), a stark contrast to its previous high of 320 billion HKD.

As 2023 unfolds, the wave of “AI plus” innovations is sweeping across industries, reinforcing the sentiment that virtually any sector can be revitalized through AI

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