(Yicai) Oct. 20 -- Sharetronic Data Technology, a Chinese artificial intelligence infrastructure company, has signed a five-year contract potentially worth as much as CNY37.5 billion (USD5.6 billion) to provide AI cloud computing services to an unidentified client.

Sharetronic Data’s subsidiary Xiechuang Intelligent Computing Technology Shenzhen will provide the services to the client, which has the option to extend the contract for five more years, its Shenzhen-based parent company said yesterday. Sharetronic Data divulged no further details of the deal, citing commercial confidentiality and concerns that disclosure could give rise to unfair competition or a breach of contract.

The computing facilities covered by the agreement must first be inspected and accepted by the client before they can be formally commissioned and service fees begin to accrue, Sharetronic Data noted, adding that the client will pay service fees monthly.

The deal is expected to have a positive impact on Sharetronic Data’s operating performance in the future, strengthen its core competitiveness and market influence, and further the high-quality upgrade of its computing business, the firm pointed out.

But the company also cautioned that it would need to make substantial upfront investments in hardware, including server computers, before it could begin fulfilling the agreement. The resulting financial burden could affect its net profit in future years, Sharetronic Data said,

As a result, the firm’s shares [SHE: 300857] tumbled in Shenzhen today, closing 7.1 percent lower at CNY201.30 (USD30.14) apiece. The stock is still up 67 percent since the end of last year.

Intelligent computing services are one of Sharetronic Data’s four main business segments. The company provides integrated computing infrastructure solutions tailored to customers’ server configurations and application requirements, serving major domestic internet companies, AI model developers, and large telcos.

In the first half of this year, income from that business soared 163 percent from a year earlier to CNY3.2 billion (USD481 million), accounting for 26 percent of Sharetronic Data’s total revenue in the period, according to its semiannual earnings report.

Editor: Futura Costaglione