ByteDance H1 Revenue Nears Meta, but AI Spending Drags Profit Down to $20 Billion

ByteDance's first-half revenue surged 30% to $120 billion, nearly on par with Meta, but massive AI investment led to a rare profit decline. The company secured a record $30 billion loan to bet on AI infrastructure, rolling out self-developed large models, video generation, and cloud services. TikTok's overseas revenue share rose to 30%, with e-commerce expansion accelerating as a new growth engine.

ByteDance is at a crossroads between scale expansion and profit pressure. The Chinese tech giant posted strong revenue growth in the first half, nearly matching Meta, but heavy AI spending is eroding profitability, resulting in a rare profit decline in years.

According to The Information, three people familiar with the matter said ByteDance's net profit fell by a single-digit percentage year-over-year in the first half to about $20 billion; revenue grew about 30% year-over-year to roughly $120 billion. Meanwhile, Meta's first-half revenue also grew 30% to $117 billion—the two companies' revenue scales are nearly equal, but their market caps differ sharply: Meta is valued at about $1.7 trillion, while ByteDance is estimated at $630 billion by secondary market tracker CapLight.

The core driver of the profit decline is a sharp rise in AI spending. ByteDance recently completed its largest-ever bank loan of about $30 billion, part of which is expected to support its expanding AI infrastructure investment. At the same time, TikTok's U.S. business is accelerating e-commerce expansion after completing a data security restructuring in January, providing significant support for overall revenue growth.

Revenue Growth Accelerates, TikTok's Overseas Contribution Keeps Rising

ByteDance's roughly 30% revenue growth in the first half slightly outpaced its expansion pace over the past two years. People familiar with the matter said the company's full-year revenue grew 29% to about $200 billion last year, with a similar growth rate in 2024; net profit rose 27% to $42 billion last year.

Overseas revenue share is steadily increasing. According to the report, a person familiar with the matter said overseas revenue accounted for more than 30% of ByteDance's total revenue in the first half, with the vast majority coming from TikTok; this share was only 25% in 2024 and is expected to remain around 30% for all of 2025. Douyin remains ByteDance's largest revenue source, but TikTok's weight in the overall revenue structure continues to expand.

In January, ByteDance sold 80% of TikTok's U.S. data security business to a U.S. holding joint venture while retaining the app's revenue operations. According to The Information's earlier report, after completing the restructuring, TikTok is stepping up efforts to expand e-commerce in the U.S., launching new programs to attract established brands to TikTok Shop.

AI Spending Erodes Profit, Massive Loan Provides Ammunition for Expansion

AI spending is the direct cause of the current profit pressure. ByteDance independently develops large language models and video generation models; its AI assistant Doubao is one of China's most popular mobile AI applications, and its Seedance video generation model holds a leading position in the global AI video market. The company is also actively expanding its AI cloud business, selling self-developed models to enterprise customers.

On the chip front, ByteDance continues to seek procurement channels for existing advanced chips, and according to The Information's May report, the company has been developing its own specialized chips for AI model inference. To support these investments, ByteDance recently completed a bank loan of about $30 billion, setting a record for the company's largest single financing.

On the commercialization front, ByteDance launched Doubao Work, a workplace AI assistant for professional users, in June with paid subscription plans; the company also hopes the market popularity of its Seedance video model will bring more revenue to its AI business and cloud platform.

China's AI Competition Intensifies, ByteDance Sticks to Self-Development

ByteDance faces strong pressure from Chinese competitors in the AI race. Over the past few months, Moonshot, Alibaba, Z.ai (Zhipu AI), and DeepSeek have successively launched open-source models that demonstrate near-frontier capabilities in coding and agent tasks at costs far lower than mainstream U.S. models, quickly gaining widespread global attention. In comparison, ByteDance has fallen behind in this competition.

Facing the gap, ByteDance founder Zhang Yiming made a clear statement at an internal meeting in July: the company will not adopt "distillation"—using outputs from U.S. frontier models to train its own models—even if it means lagging behind domestic competitors in the short term.

ByteDance is also the only major Chinese model developer that keeps the vast majority of its models closed-source, with enterprise customers accessing them primarily through its own cloud platform.

Meanwhile, domestic competitors are also accelerating fundraising to bet on AI: Alibaba is seeking to raise about $10 billion through a large-scale share placement for AI infrastructure; Zhipu AI (Z.ai) launched a $5 billion equity and convertible bond issuance plan this week.