GuShiio.com Wen| photon planet
“Over the past two weeks since we received leave, customers of state-owned enterprises in Shenzhen and Beijing have been asking us how to access DeepSeek. While we were still adapting ourselves internally, others wanted solutions. rdquo;
A government and enterprise official with a cloud business waist told Photon Planet that the emergence of DeepSeek has brought about a revaluation of the value of domestic technology stocks. As the first entry point for AI services, cloud computing has naturally become the center of this round of investment boom.
The underlying logic of the revaluation is that the costs incurred by DeepSeek are completely open source. The price of the API that allows developers to freely call and re-develop DeepSeek-R1 is only about 3% of the price of OpenAI’s flagship model. The significant reduction in costs has significantly optimized the profit model of AI applications. The surging demand has returned to cloud vendors whose growth has slowed down in recent years.
During this period, we have also witnessed major cloud vendors successively accessing DeepSeek to enter their own model training platforms, attracting customers under the guise of lower and more stable prices than DeepSeek.
However, for leading cloud vendors with complex trading schedules and numerous businesses, cloud computing is just part of their valuation logic. In contrast, waist cloud vendors seem to be the biggest winners in this round of capital movement.
In terms of market performance, in the few days after the resumption of fake sales, related targets such as Qingyun, Youkeedao and Jinshan all continued to rise and fall, rising more than 10 times compared with the low point in September last year. As of press time, the stock price of U.S. stocks had reached 20.67 US dollars, and Jinshan Cloud is the epitome of the waist cloud merchants who have made a fortune in silence.
Extreme market sentiment has led our understanding of technology and business models to extremes. Some people even believe that this affirmative action movement in computing power will be an opportunity for cloud merchants to break through the blockade of large manufacturers, but the facts are deviated from it.
DeepSeek is not the savior
“Let’s follow up and learn first and see the market response before talking about it. rdquo;
This is what a person from Jinshan Cloud observed. Although its location may have realized the changes DeepSeek may bring earlier than overseas and domestic media, due to the company’s size and its own business limitations, Jinshan Cloud was basically in a wait-and-see situation during the days when DeepSeek blossomed outside the walls.
This does not affect its access to DeepSeek as soon as possible after the holiday. Whether to access or not is to seize the volume and is also a principle; whether to invest or invest heavily in businesses such as model training and application development because of DeepSeek is related to the lifeline and is business.
This is related to the position of Jinshan Cloud as the waist and in the cloud computing market. Since the demand for CDN (Content Delivery Network) has shrunk gradually during the special period, the growth of public clouds has once slowed down, facing the dilemma of declining overall revenue. Especially for waist manufacturers, the high-cost IaaS construction invested in the early stage has become a burden that slows down the pace of profits.
Take Jinshan Cloud as an example. In the first quarter of 2022, its cloud distribution business represented by CDN shrank, a year-on-year increase of 45%.
Since then, waist cloud manufacturers have been actively seeking transformation. Among them, there are two more important and effective models: becoming a third party (Others) in the industry, specializing in undertaking project orders that large factories are unwilling to do but small factories are unable to do, such as smart cities and financial cloud; and finding stable backers for business growth, such as Qiniu, which sells Alibaba Cloud, and Jinshan Cloud, which undertakes Xiaomi Cloud’s business.
The common denominator of industries that use infrastructure as a means of production is that even if they lose money, they cannot let equipment idle. This truth is based on assembly lines in the industrial belt, and on the cloud computing industry, it is based on computing clusters.
According to the development pace of public cloud before 2023, waist cloud manufacturers can still rely on the above orders to survive, compete for positions with each other, and live in peace with each other. However, the thunder of overseas GPT has brought new opportunities to Jinshan Clouds. The upfront costs that are difficult to cover have gradually been diluted by GenAI’s demand for computing power, and idle computing clusters can also be efficiently utilized.
Jinshan Cloud BD Achen (pseudonym) told Photon Planet that training on the six tiger models that seem to be divided among Alibaba Cloud, Tencent Cloud and others actually has quite outrageous amounts running on Jinshan Cloud, such as Baichuan Intelligent, MiniMax and Intelligent Spectrum AI.
This business is different from the API calls and investment quotas of top cloud vendors in reverse bidding. It is a real revenue from GPU computing power.& ldquo; Cloud vendors have never been product-oriented companies. Whether it is PasS or SaaS, it is just to attract our customers ‘businesses to the cloud.” rdquo;
Jinshan Cloud, which has a clear self-positioning, is not shy. When leading manufacturers such as Baidu and Ali are developing large models one after another, the profit-based approach based on the open source community actually allows it to enter the model service track in an asset-light way. Not only does it not have the risk of consuming computing power in self-developed model training, it can instead focus more on implementing engineering solutions in the open source community into specific scenarios.
One example is that Jinshan Cloud’s 2024 Q3 financial report shows that its AI-related revenue reached 362 million yuan, accounting for 31% and 19% of the group’s public cloud revenue and total revenue respectively.
In contrast, Baidu Intelligent Cloud’s AI-related revenue for the same period was calculated at 11% of 4.9 billion yuan, or 539 million yuan, based on financial disclosure standards. Jinshan Cloud’s AI-related revenue is not far from similar revenue of Baidu Intelligent Cloud during the same period, and Alibaba Cloud, which is now in the limelight due to its official cooperation with Apple, has not disclosed its specific AI-related revenue and proportion.
According to IDC data, the 24H1 domestic GenAI IaaS market grew by 203.6% year-on-year, far exceeding the overall IaaS market growth rate of 5.2%. Long before DeepSeek, AI became the savior of Jinshan Cloud.
White Knight Lei Jun
Market sentiment is often blind and short-sighted. Nvidia’s share price evaporated by 20% overnight, which will not affect the entire 50-series graphics card market being out of stock, let alone the indispensable position of the H100 in model training and use.
“Equalization of computing power is also like knowing that drinking water is cold and warm. Many industry insiders told Photon Planet that the explosion of DeepSeek has not significantly affected the price of upstream computing power, and it is an exaggeration to say that fluctuations are exaggerated. rdquo;
For now, no matter how low or even free API calls are made by leading manufacturers in order to attract customers, equalization of computing power is at best just a sugar-coated bullet from leading cloud manufacturers to AI application companies, while application and model manufacturers will copy DeepSeek’s engineering methods. It is still unclear whether they will.
The market sentiment brought by DeepSeek may be the catalyst for Jinshan Cloud’s soaring market value, but behind this valuation logic, another factor that cannot be ignored is Xiaomi, which has been booming for more than a year.
As a subsidiary of Jinshan Group, the top three shareholders of Jinshan Cloud are Jinshan Software, Xiaomi Group and Lei Jun Individual. The total shareholding ratio exceeds 60%. Xiaomi has been Jinshan Cloud’s largest customer and backer from beginning to end until Jinshan Cloud went to the United States to ring the bell.
On May 8, 2020, Jinshan Cloud completed its IPO on Nasdaq with an issue price of US$17/share. Under the capital market’s pursuit of corporate independence, Jinshan Cloud began to try to get rid of its label as a Lei Jun company and seek a new growth curve. Its revenue share from Xiaomi and Jinshan Software once dropped to about 10%. However, due to the shrinking demand for public clouds mentioned above, the rise of operator clouds, and some objective reasons, its U.S. stock price once bottomed out at US$2.56/share.
Until Xiaomi’s automobile business started with the advent of SU7, Jinshan Cloud, who Lei Jun once let go, began a long journey to repair its valuation because of the story of accompanying Lei Jun to start a business again. In the six months after the official release of SU7, Jinshan Cloud’s revenue from Xiaomi and Jinshan Group exceeded 700 million yuan, accounting for 19.2% of its total revenue, of which revenue from Xiaomi reached 15%.
The third-party philosophy of waist cloud manufacturers seeking survival in the cracks seems appropriate to Xiaomi, which has differentiated competition needs. On November 19 last year, the newly signed framework agreement between Jinshan Cloud and Xiaomi was fed with orders of 2.3098 billion yuan in 2025, 3.138 billion yuan in 2026, and 4.035 billion yuan in 2027, becoming a tool for market value management.
A Jinshan Cloud person bluntly said that DeepSeek’s impact on its business is far less than that of Xiaomi, which builds cars. Especially after undertaking cloud demand for businesses such as Xiaomi Automobile and People, Car and Home Ecology, whether it is the computing power scheduling experience in business cloud or the brand effect of SU7, Jinshan Cloud has brought new growth from the car-building industry. Wei Xiaoli also has some businesses running here with us. rdquo;
On November 24, Jinshan Cloud CFO He Haijian responded to market questions about Jinshan Cloud’s growth space and mentioned that as Xiaomi’s AI factory, Jinshan Cloud’s EBITDA growth rate will be faster than gross profit growth. Behind this is Xiaomi Motors ‘annual delivery volume of 130,000 yuan, monthly WPS of 600 million, and 860 million Xiaomi IoT users.
For Jinshan Cloud, who lives between leading manufacturers and operators, any profitable increase is particularly important and does not need to consider the restrictions placed on the growth ceiling by large customers. As for whether the more important smart driving scenarios outside the IoT will further amplify the value-added bubble brought by Xiaomi, it is a later question.
Government and enterprise market to be broken through
In addition to major customers such as AI and Xiaomi, Jinshan Cloud’s stable revenue still comes from project-based orders in the government and enterprise markets. Logically speaking, after BAT began to take steps back, it should be able to free up more market space for waist manufacturers, but this is not the case.
The government-enterprise market with complex customer conditions is naturally slow to heat up, and changes in share will not appear in just half a year. On the other hand, although the Internet cloud has begun to return to the public cloud in the past more than a year under the promotion of GenAI, its continuing influence on the government and enterprise market still exists. Coupled with the rapid progress of operator clouds, Jinshan Cloud has still not been opened up.
Taking Wuhan, Shanghai and other places where government digitalization is progressing rapidly and competition in the government-enterprise market is fierce, as examples, local governments have established local platform companies to contract cloud computing and digitalization projects. Due to objective factors, Internet Cloud naturally became a subcontractor of these local companies after refusing to be the general contractor and integrator. They are still participating in regional business, but they seem to be less forward.” rdquo;
Moreover, with localization and price advantages, the operators who have beaten BAT companies to defeat are not easy players to play with. A waist cloud person told Photon Planet that since last year, the friends we are facing have changed from BAT to operators. The ratio of their order to ours is about 3:1 to 4:1.& rdquo;
It is undeniable that Xinchuang Environment and GenAI have provided good conditions for Waist Cloud’s government and enterprise market to break through. Local government subsidies for marginal computing power have also further increased Jinshan Cloud’s order-receiving rate and revenue in local smart computing and large model projects. However, when operators cloud need to rely on price advantages to consolidate their positions, government and enterprise business is still a tough business that large companies do not want to do and small companies have no money.
Even if DeepSeek has caused ripples in the calm water, it is still too early for it to affect the solid government and enterprise market.
Compared with the model specifications of the DeepSeek 671B, the industry models of 30B to 110B specifications that are popular in the government and enterprise market today are far from it. Although the government and enterprise customers that Ah Chen has contacted in recent times are quite interested in DeepSeek, judging from past transaction cycles, it is still more realistic to sell GPU computing power.
Affirmative rights is the fantasy of geeks and idealists. When technology is pulled out of the open source community by commerce, it is inevitable that we need to accept it.
