Kunlun(SZ:300418) 3 6 Ke·2025-06-16 11:55Core Viewpoint - Kunlun Wanwei is aggressively pursuing AI commercialization, but it faces significant financial challenges, including its first loss since going public, attributed to high R&D and marketing expenses [2][11][10]. Group 1: AI Commercialization Strategy - Kunlun Wanwei aims to transition from a mid-sized internet company to a major player by heavily investing in AI, believing it will reshape business models and generate substantial returns [3]. - The company launched the "Tiangong" large language model in April 2023, claiming it to be the first domestic model comparable to ChatGPT, which initially boosted its market value to 793 billion [4]. - Kunlun Wanwei is focusing on practical applications of AI across various sectors, including music, social networking, and video, with notable products like the Mureka music platform and Linky social app [4][5][6]. Group 2: Financial Performance and Challenges - In 2024, Kunlun Wanwei reported a revenue of 56.6 billion but incurred a loss of 15.9 billion, marking its first loss since 2015 [11]. - The company's R&D expenditure as a percentage of revenue increased from 15.54% in 2022 to 28.22% in 2024, reflecting the financial strain of its AI transition [10]. - Sales expenses also surged, reaching 23.04 billion in 2024, a 42.23% increase year-on-year, driven by marketing costs for AI software and short video services [13][14]. Group 3: Market Position and Future Outlook - Despite its ambitious AI initiatives, Kunlun Wanwei's traditional gaming business has significantly declined, contributing only 4.44 billion in revenue by 2024, down from 12 billion in 2020 [17]. - The company is committed to AI, stating it will not pursue investments outside the AI sector, indicating a strategic focus on this area moving forward [19]. - The competitive landscape for AI is challenging, with the need for either superior model capabilities or niche market advantages to succeed [20][21].