The expert’s list of public companies, evaluated solely from the perspective of company operations and development, clearly indicates that a company’s fundamentals are unrelated to its stock price. It is entirely inadvisable to buy or sell stocks based solely on the perceived quality of a company.
The expert wrote on September 10, 2024, “Fourth Paradigm, he claims, is the Chinese version of Palantir,” rating Fourth Paradigm as a red list (watch list) company.
Five days earlier, on September 5, 2024, he wrote, “SenseTime: Unfortunately, not listed on A-shares, limiting the exertion of core competitiveness,” rating SenseTime as a black list (watch list) company. Of course, this article also led to a complaint from SenseTime.
On the surface, these two companies appear very similar; both are star companies in the artificial intelligence industry, both are unprofitable loss-making companies, and both are listed in Hong Kong. Their leading figures, the chairman and CEO, are also alumni of Shanghai Jiao Tong University.
Dr. Dai, 41, holds a bachelor’s degree in Computer Science and Technology and a master’s degree in Computer Application Technology from Shanghai Jiao Tong University, and a Ph.D. in Computer Science and Engineering from the Hong Kong University of Science and Technology. He is also the first in China to win the ACM World Championship.
Dr. Xu, 43, holds a bachelor’s degree in Computer Science and Engineering and a master’s degree in Computer Engineering from Shanghai Jiao Tong University, and a Ph.D. in Computer Science and Engineering from the Chinese University of Hong Kong.
When the expert first evaluated Fourth Paradigm and SenseTime, the stock price of Fourth Paradigm was 32.7 HKD, with a market capitalization of 16.5 billion HKD; the stock price of SenseTime was 1.13 HKD, with a market capitalization of 41.1 billion HKD. As of today, the stock price of Fourth Paradigm is 52.55 HKD, with a market capitalization of 26 billion HKD, an increase of 60.7%; the stock price of SenseTime is 1.48 HKD, with a market capitalization of 54.8 billion HKD, an increase of 31%.
This also indicates:
1, the expert’s initial reminder that a company’s fundamentals are unrelated to its stock price; as long as the concept of artificial intelligence gains momentum, both good and bad companies can soar;
2, good companies indeed perform better than bad companies, especially when viewed over a longer time frame. The road is long, and the horse’s strength is known over time; practice is the only criterion for testing truth, and practice requires time for verification.
I. Performance
In 2024, the company’s total revenue was RMB 5.261 billion, a year-on-year increase of 25.1%; gross profit was RMB 2.245 billion, with a gross margin of 42.7%, and gross profit increased by 13.4% year-on-year; the annual loss attributable to the parent company’s owners was RMB 269 million, a reduction of RMB 640 million compared to the full year of 2023, a year-on-year narrowing of 70.4%; the adjusted net loss for the year was RMB 292 million, a reduction of RMB 123 million compared to the full year of 2023, a year-on-year narrowing of 29.6%.
Looking at a five-year horizon, the compound annual growth rate (CAGR) of operating revenue is 53.72%, while annual losses have been reduced for four consecutive accounting years since 2021.
Entering the first quarter of 2025, against the backdrop of the national acceleration in the development of artificial intelligence and the comprehensive embrace of AI transformation across industries, the company’s core business has performed excellently, achieving rapid revenue growth. As of March 31, 2025, the company’s total revenue for the first quarter was RMB 1.077 billion, a year-on-year increase of 30.1%; gross profit was RMB 444 million, a year-on-year increase of 30.1%; the company’s gross margin during this period remained stable compared to the same period last year, with a gross margin of 41.2%.
Fourth Paradigm is likely to turn a profit this year.
II. Performance Analysis
Fourth Paradigm’s business is divided into three segments: the Prophet AI platform, SHIFT intelligent solutions, and Shishuo AIGS services. As of December 31, 2024, revenue from the Prophet AI platform was RMB 3.676 billion, a year-on-year increase of 46.7%, accounting for 69.9% of total revenue; revenue from SHIFT intelligent solutions was RMB 1.022 billion, a year-on-year decrease of 20.3%, accounting for 19.4%; revenue from Shishuo AIGS services was RMB 563 million, a year-on-year increase of 35.4%.
Fourth Paradigm is committed to building an enterprise AI system architecture that deeply integrates AI agents with vertical world models, having implemented hundreds of agent applications across various industries, covering enterprise-level agent assistants in scenarios such as financial credit risk control, water and electricity equipment operation and maintenance, hydrological data monitoring, chronic disease management, intelligent course learning, automotive manufacturing MES system management, and fluid dynamics design.
The company’s customer base continues to expand, continuously enhancing customer service depth and user stickiness, achieving in-depth industry coverage, contributing value to thousands of industries with artificial intelligence technology, and actively expanding in strategic fields such as energy and electricity, finance, telecommunications, and transportation.
In 2024, the number of benchmark users served by the company was 161, a year-on-year increase of 16%; focusing on creating value for customers, the average revenue of benchmark users was RMB 1.91 million, with a net revenue growth rate (NDER) of 110% for benchmark users in 2024.
III. Conclusion
Although Fourth Paradigm and SenseTime are both star enterprises in the artificial intelligence industry, the difference is that Fourth Paradigm’s commercial scenarios have been solidly advanced. SenseTime is still exploring the path of “large devices + large models,” which essentially relies on having accumulated NVIDIA GPUs early on and building an AIDC intelligent computing center, but its downstream customers are still relatively vague.
In contrast, Fourth Paradigm’s downstream customers have already covered 161 benchmark users across various industries, which adds significant value. The willingness of corporate customers to spend money on purchasing services is the true market validation of real demand.AI Agent + vertical world models represent what the expert understands as AI + Industry Knowledge, where the accumulation of industry knowledge creates a competitive barrier among AI competitors, allowing for the discovery of real demand in the genuine business world.
Lastly, the last but not least, let’s take a look at the income of Fourth Paradigm’s executives:
Dr. Dai’s annual salary is only 1.17 million, while the other two directors earn over 2 million annually. Among the executives, only one has an annual salary in the range of 2-3 million HKD, one in the range of 1-2 million HKD, and three others earn below 1 million HKD. These are the highest earners at Fourth Paradigm.
High salaries do not foster integrity; high salaries only breed laziness. Recently, the CEO of Ele.me was caught in corruption; his annual income must be over ten million. These high-salary internet companies, AI companies, and tech star companies lack serious internal audits. Increasing efforts in this area will not stop with the current individuals.
Therefore, from the perspective of investors like the expert, “high salary” + “unprofitable” + “star tech innovation enterprise” absolutely indicates that this company lacks combat effectiveness and a future. In contrast, Fourth Paradigm’s reasonable compensation + stock options, is a better model that aligns the interests of management with those of shareholders.
Expert Red and Black List: Fourth Paradigm Red List (Watch List)
