By Yang Jianyong

In the first half of 2026, iFLYTEK's revenue reached 11.6 billion yuan, up 6.65% year-on-year, indicating a steady increase in revenue scale. However, behind the impressive revenue figures, profitability showed a stark contrast, with an overall loss of 200 million yuan for the period. After excluding non-operating gains and losses such as subsidies, the loss attributable to shareholders further widened to 636 million yuan.

Seasonal Performance Characteristics, Full-Year Profitability Expected

It is noteworthy that iFLYTEK's performance exhibits distinct seasonal fluctuations. The company has reported losses in its semi-annual reports for the past three years but has managed to achieve strong profitability for the full year.

Regarding the factors contributing to this seasonal fluctuation, iFLYTEK pointed out that planning and argumentation (demonstration) for smart education and smart city projects are mostly concentrated in the first half of the year, with project acceptances primarily occurring in the second half. Typically, revenue in the fourth quarter accounts for a relatively high proportion, demonstrating significant seasonal characteristics.

At the same time, the company continues to increase investments in research and development (R&D) and market expansion. Fixed costs are evenly distributed throughout the year, making it challenging for current operating gross profits to cover period expenses, resulting in periodic losses.

High R&D Investment Weighs on Core Business Profitability

Since the advent of ChatGPT at the end of 2022, various large model services have emerged competitively. As a company with a long-standing focus on the artificial intelligence sector, iFLYTEK has garnered significant attention from all quarters. Facing the industry opportunities brought by AI large models, it took the lead in launching the Spark Large Model, entering the general-purpose large model arena.

Amidst this wave, iFLYTEK's market capitalization once approached 200 billion yuan. Regrettably, it now stands at 94.1 billion yuan, having halved from its historical peak, reflecting market concerns over profitability. Of course, this is also influenced by multiple factors, including the overall market environment.

From the perspective of profit quality, iFLYTEK's net profit relies heavily on subsidies. In 2025, the net profit was 839 million yuan, but the net profit attributable to shareholders after excluding non-recurring items was only 264 million yuan. Government subsidies for that year amounted to 636 million yuan, accounting for 75.8% of the net profit. In the first half of 2026, subsidies reached 306 million yuan. The continuous increase in R&D investment has further contributed to the relatively weak profitability of the core business.

Polarized Growth: Open Platform Surges, Hardware and Enterprise Applications Lag

Thanks to sustained R&D investment, iFLYTEK has established four commercialization systems: AI open platform, AI industry applications, AI enterprise-level applications, and AI consumer applications, enabling it to occupy (secure) a favorable position in the AI market competition. As of June 2026, the iFLYTEK AI Open Platform had attracted 11.53 million developers, including 3.219 million large model developers, representing a year-on-year increase of 111%.

Notably, the open platform has become iFLYTEK's largest business segment, generating 3.7 billion yuan in revenue in the first half of 2026, up 36% year-on-year, with its revenue share further increasing to 31.87%. Among them, the MaaS platform has emerged as a significant growth engine for the open platform business, with revenue from large model APIs and MaaS platform services increasing by approximately 70% year-on-year in the first half.

In contrast to the rapid growth of the AI open platform, AI enterprise-level applications have performed poorly. Revenue from this business segment was 225 million yuan in the first half, a significant decline of 48%. Meanwhile, the smart hardware business also remained sluggish, with revenue of 731 million yuan, down 15.96% year-on-year.

Fundraising to Bolster Large Model Infrastructure

Large models belong to a technology- and capital-intensive industry, with model training highly dependent on AI infrastructure. To enhance the competitiveness of its large models, global tech giants have been expanding their capital expenditures. The combined capital expenditures of Microsoft, Google, Amazon, and Meta are expected to reach 750 billion US dollars in 2026, aimed at strengthening the AI computing power infrastructure and enhancing competitiveness in the AI market.

As large model technologies continue to iterate, the essence of industry competition has shifted to a computing power showdown in AI infrastructure. To this end, iFLYTEK has raised nearly 4 billion yuan through the market this year. Among them, 2.4 billion yuan will be used for computing power platform construction to support the continuous iteration and upgrading of large models. Another 800 million yuan will be allocated to the Spark Education Large Model and typical product development projects, upgrading the Spark Education Large Model to strengthen its competitive edge in the education market.

iFLYTEK pointed out that the computing power platform serves as the technological foundation and infrastructure supporting the company's R&D and sustained growth and competitiveness across various business lines. The implementation of this project will provide computing power assurance for the iFLYTEK Spark Large Model and gradually transform the advantages of full-stack controllable technologies into industrial advantages in application deployment through continuous iteration from the model infrastructure to industry models and intelligent agent applications.

In Conclusion

In the era of generative AI, large models represent the hottest technology, with all walks of life (all industries) rapidly integrating large model services. This is driving the AI market into a new growth cycle.

For vendors deeply involved in the AI sector, this also means greater development opportunities to fully unleash the value of their technologies and reap the rewards of AI industry development.

Yang Jianyong is a contributor to Forbes China. The views expressed herein represent his personal opinions only. He is dedicated to in-depth interpretations of cutting-edge technologies such as AI large models, artificial intelligence, the Internet of Things, cloud computing, and smart hardware.