Demand for cloudy processors has leveled off at top Chinese cloud giants Alibaba and Tencent, whose customers increasingly want GPUs instead.

Both companies released quarterly results last week. Alibaba Cloud posted six percent year-over-year revenue growth to deliver $3.64 billion for the quarter. Tencent does not disclose figures for its hyperscale business, but attributed growing cloud demand as a reason why its Business Services line delivered year-on-year growth in the "teens".

Tencent's chief strategy officer James Mitchell told investors that the rent-a-GPU business is booming – but modestly compared to the US market, as China has fewer well-funded AI startups. Local AI outfits, he observed, can have $1 or $2 billion in capital, compared to US startups that can have between $10 and $90 billion in the kitty.

Mitchell said the "percentage growth rate is very fast" for GPU rentals, but admitted that's partly due to a low base level of business. "Some of the demand for renting GPUs in the cloud is incremental, some of it is replacing demand that would have otherwise been there anyway to rent CPUs in the cloud," he added. "And so, while the business in a GPU supply is doing very well, the business in CPU processing is more flat because the incremental demand is for GPUs, not CPUs."