ByteDance

TikTok's Parent Goes AI

ByteDance is the world's largest company you cannot invest in. The parent of TikTok and Douyin has built a $330-600 billion private empire on algorithmic content distribution — and it is now applying that same machine learning DNA to the generative AI race with resources that dwarf most competitors. With AI capital expenditure raised to 200 billion yuan (~$30 billion) for 2026, up from 160 billion yuan previously, ByteDance is spending at a scale that places it alongside the largest Western hyperscalers — and arguably surpassing most of them.

From Algorithms to Foundation Models

ByteDance was founded in 2012 by Zhang Yiming on the insight that AI-driven content recommendation could dominate mobile attention. The company's core technology — the recommendation engine powering TikTok and its Chinese sister app Douyin — was always an AI product. The leap to generative AI was natural rather than strategic. By 2023, ByteDance had established its Seed research division to build large-scale foundation models, leveraging the massive computational infrastructure already underpinning its content platforms.

Doubao: China's Most-Used AI App

In May 2024, ByteDance officially launched Doubao, its AI chatbot and assistant platform, at the Volcano Engine FORCE Conference. What happened next was remarkable: by early 2025, Doubao surpassed 100 million daily active users, making it the most widely used AI application in China — and likely the world by active user count. The app offered free access to competitive language models, undercutting rivals on price and leveraging ByteDance's unparalleled distribution capabilities through Douyin and other owned platforms.

Doubao 2.0, released in February 2026, represented a significant architectural upgrade. Positioned for the "agent era," the model was designed to execute complex, multi-step real-world tasks rather than merely answer questions. ByteDance's Seed research team optimized the model for agentic workflows — tool use, function calling, and autonomous task completion — reflecting the industry's shift from chatbots to AI agents.

ByteDance is also extending AI into hardware. A second-generation Doubao AI smartphone is planned for mid-to-late Q2 2026, building on the initial device to deepen integration between ByteDance's AI models and consumer hardware.

Seedance and Creative AI

ByteDance's most celebrated AI product may be Seedance, its video generation model. Seedance 1.0 launched in mid-2025, and version 2.0, released in February 2026, went viral globally. The model generates cinematic-quality video clips from text prompts, reference images, or video clips — with what many reviewers called the most coherent motion and consistent character rendering of any AI video tool. Seedance 2.0 introduced four-modality input (text, images, video, and audio simultaneously), native 2K resolution, and the ability to generate joint audio-visual content. Even Elon Musk publicly praised its output.

The broader Seed model family includes Seedream for image generation (up to 4K resolution), UI-TARS for GUI automation, BAGEL for open-source multimodal understanding and generation, and general-purpose agent models like Seed 1.6 and Seed 1.8. Seed3D 2.0, released April 23, 2026, represents the next generation of ByteDance's 3D generative modeling — achieving state-of-the-art results in both geometry and texture generation. ByteDance is building a comprehensive AI portfolio that mirrors its content ecosystem — spanning creation, understanding, and distribution.

Infrastructure at Scale

ByteDance's AI ambitions are backed by extraordinary capital investment. For 2026, the company has raised total AI capital expenditure to 200 billion yuan (~$30 billion), up from 160 billion yuan, with approximately 85 billion yuan budgeted specifically for AI processors. A significant and growing share of the processor budget is allocated to domestic Chinese chips, reflecting both export restriction realities and a strategic push to build resilient domestic supply chains. Reports indicated ByteDance sought to purchase $7 billion worth of Nvidia chips in 2025, potentially making it one of the largest holders of AI accelerators globally. To mitigate U.S. export restrictions on advanced chips to China, ByteDance also pursued partnerships with Huawei for domestic AI chip alternatives.

This infrastructure powers not only ByteDance's own products but also Volcano Engine, its enterprise cloud platform, which offers AI model hosting, fine-tuning, and deployment services to third parties. Volcano Engine has become a significant competitor in China's enterprise AI market.

The TikTok Shadow

ByteDance's AI strategy is inseparable from the geopolitical controversy surrounding TikTok. The app faces ongoing pressure to divest its U.S. operations due to national security concerns, creating uncertainty that affects ByteDance's global AI ambitions. The company's response has been to invest even more aggressively in its Chinese domestic AI capabilities, where political risk is lower and the market is enormous.

Revenue provides the fuel for this spending. ByteDance's second-quarter 2025 revenue hit approximately $48 billion (up 25% year-over-year), with the company overall profitable despite losses in its U.S. TikTok operations. Internal share buybacks valued the company at over $330 billion in mid-2025, with some secondary transactions pushing toward $600 billion by early 2026.

Strategic Position

ByteDance's competitive advantage is distribution. Most AI companies build models and then search for users; ByteDance has hundreds of millions of users embedded in AI-optimized content platforms and can deploy new models instantly at scale. Its Doubao chatbot's rapid user growth demonstrates this advantage. Combined with willingness to spend at hyperscaler levels — now $30 billion annually for AI — and a research team that has produced genuinely competitive models across modalities (language, video, 3D, image), ByteDance is positioned as one of the most formidable AI companies in the world — if not one that Western executives can easily partner with given geopolitical complexities.