Executive Summary / Key Takeaways

• Strategic Turnaround and Financial Rejuvenation: WiMi Hologram Cloud Inc. has executed a remarkable financial turnaround, shifting from significant net losses in previous years to a net income of approximately RMB 103.3 million (USD 14.4 million) in 2024, underpinned by robust cash reserve growth to USD 455 million as of August 2025.
• Pioneering Quantum and Holographic Technologies: The company is strategically investing in and developing cutting-edge technologies, including a hybrid quantum-classical model for privacy, advanced quantum machine learning algorithms, Scalable Quantum Neural Networks (SQNN), and Quantum Random Access Memory (QRAM), aiming to establish a significant technological moat.
• Niche Market Leadership in China's AR Sector: WiMi maintains a specialized position in China's augmented reality (AR) and holographic market, leveraging its proprietary technology in AR advertising, entertainment, and semiconductor solutions to serve diverse industries.
• Aggressive Investment in Future Growth: With substantial cash reserves, WiMi plans to allocate USD 450 million towards quantum and holographic technology applications, alongside increased deployment in blockchain and Bitcoin-related cryptocurrency, signaling a strong commitment to long-term innovation and expansion.
• Competitive Dynamics and Risks: While WiMi demonstrates technological differentiation, it operates in a competitive landscape against global tech giants like Meta Platforms, Inc. , Microsoft Corporation , and Snap Inc. . Potential risks include shareholder dilution from convertible notes and the inherent challenges of commercializing nascent quantum technologies.

The Holographic Horizon: WiMi's Evolution in a Dynamic Market

WiMi Hologram Cloud Inc., established in 2015 and headquartered in Beijing, China, has carved a distinct niche in the burgeoning augmented reality (AR) and holographic services sector. The company's foundational strategy centers on delivering AR-based holographic services and products across three primary segments: AR Advertising, AR Entertainment, and a Semiconductor business. This integrated approach allows WiMi to offer comprehensive solutions, from embedding three-dimensional objects into video footage for advertising to providing payment middleware and holographic mixed reality software for entertainment. Furthermore, its involvement in central processing algorithm services and computer chip products positions it uniquely at the intersection of hardware and software innovation within the AR ecosystem.

The industry landscape in which WiMi operates is characterized by rapid technological advancements and evolving consumer demands. The broader market for AR and related digital services is experiencing significant growth, driven by increasing digitalization and the demand for immersive experiences. This trend is further amplified by the global push towards advanced computing, including artificial intelligence and quantum technologies, which WiMi is actively embracing. The company's holographic AR technologies find application across a wide array of industries, including manufacturing, real estate, entertainment, technology, media and telecommunications, travel, education, and retail, underscoring the versatility and broad applicability of its core offerings.

Technological Edge: Building a Quantum Moat in Holographic AR

WiMi's competitive differentiation is deeply rooted in its advanced technological capabilities, particularly in holographic AR and its aggressive foray into quantum computing. The company's core holographic AR technology enables sophisticated 3D modeling, real-time rendering, and interactive content creation. This provides tangible benefits by allowing users to seamlessly insert real or animated three-dimensional objects into video footage and embed holographic AR advertisements directly into films and shows. This capability offers advertisers a qualitatively richer and more engaging medium compared to traditional digital advertising, potentially leading to higher engagement rates and more effective campaigns.

Beyond its established AR offerings, WiMi is making significant strides in emerging technologies, particularly quantum computing. The company is actively researching a hybrid quantum-classical model designed to enhance privacy protection. This innovative system combines the acceleration capabilities of quantum computing with the stability of classical computers, utilizing differential privacy optimization algorithms. The quantum layer is responsible for feature extraction and data transformations, leveraging quantum bit properties like superposition and entanglement for data encoding. In contrast, a classical layer implements differential privacy protection and decision-making functions by adding noise. This hybrid approach aims to strike a crucial balance between privacy protection and model accuracy, with initial testing conducted through simulations on classical computers due to current quantum hardware limitations. The stated goal is to enable future applications in sensitive areas such as medical data analysis and financial risk assessment.

Furthermore, WiMi is exploring an innovative quantum machine learning algorithm for efficient training of large-scale machine learning models. This algorithm integrates quantum acceleration technology by using classical machine learning algorithms to pre-train dense neural networks, followed by the construction of sparse neural networks and the development of a quantum ordinary differential equation (ODE) system, enhanced by a quantum Kalman filtering method. This strategic initiative aims to reduce computational complexity and significantly improve model training efficiency and scalability. The company anticipates this algorithm will demonstrate revolutionary potential in accelerating image and video processing for digital art and enhancing language understanding and generation in natural language processing, while also reducing energy consumption in large-scale model training.

WiMi has also developed Scalable Quantum Neural Network (SQNN) technology, which is based on multi-quantum-device collaborative computing. This system utilizes multiple small quantum devices as parallel feature extractors, with their results aggregated through classical communication channels for final classification tasks. This approach directly addresses the limitations of current quantum computing hardware by enabling smaller devices to collectively handle larger computational tasks with improved efficiency. Experiments indicate that SQNN achieves classification accuracy comparable to traditional Quantum Neural Networks while significantly improving training efficiency, with both accuracy and speed enhancing as more quantum devices participate.

A recent breakthrough includes WiMi's new Quantum Random Access Memory (QRAM) technology. This QRAM offers constant-time data access (O(1) complexity) irrespective of memory size, supporting both classical and quantum data storage. Key features include quantum error correction, support for unknown quantum states, and a novel quantum address decoder utilizing superconducting quantum interference devices (SQUIDs). The QRAM's dynamic storage capacity adapts to computational tasks through quantum parallelism, effectively eliminating traditional RAM expansion bottlenecks. This development is profoundly significant for large-scale quantum computing, quantum machine learning applications, and the infrastructure of a future quantum internet.

For investors, these technological advancements are not merely academic; they represent the core of WiMi's competitive moat and its long-term growth strategy. By pioneering these cutting-edge solutions, WiMi aims to offer qualitatively superior products and services, potentially commanding higher average selling prices, reducing operational costs through increased efficiency, and ultimately expanding its profit margins. This technological leadership is crucial for its market positioning and its ability to capture new opportunities in the rapidly evolving digital and quantum computing landscapes.

Financial Resilience and Strategic Capital Deployment

WiMi's financial trajectory has seen a significant turnaround, underscoring the effectiveness of its strategic adjustments and operational focus. After a period of net losses from 2020 through 2023, including a net loss of approximately $59.41 million in 2023, the company reported a substantial shift to a net income of approximately RMB 103.3 million (USD 14.4 million) in 2024. This turnaround reflects a remarkable improvement in operating performance.

The positive momentum continued into the first half of 2024, with total revenues increasing by 10% to RMB 290.8 million (USD 40.8 million) compared to the same period in 2023. AR service revenue, a core component, saw a 14% increase. Net income for H1 2024 reached RMB 12.3 million (USD 1.7 million), marking a clear transition from a net loss in the prior year. This improved performance is primarily attributed to climbing demand for holographic solutions and the company's achievements in business development.

The company's liquidity and capital resources have also strengthened considerably. Cash and cash equivalents and short-term investments surged by 148.0%, from RMB 773.9 million in 2023 to RMB 1.92 billion (USD 266.9 million) in 2024, reaching a record high. This robust financial position provides WiMi with the flexibility to pursue new development opportunities and invest in innovation. As of August 7, 2025, WiMi's total cash, cash equivalents, and Bitcoin-related securities derivatives investments further escalated to approximately RMB 3.266 billion (USD 455 million). This includes RMB 1.741 billion (USD 242 million) in bank cash and RMB 1.525 billion (USD 212 million) in Bitcoin-related securities derivatives and short-term investments.

Strategically, WiMi plans to allocate USD 450 million towards investments in quantum technology and holographic technology applications, alongside increasing capital deployment in blockchain and Bitcoin-related cryptocurrency applications. This aggressive investment strategy highlights the company's commitment to leveraging its financial strength to solidify its technological leadership and drive future growth. A notable strategic move on June 20, 2025, involved WiMi's purchase of a convertible note from its subsidiary, MicroAlgo Inc. , for $32.2 million, with an original principal amount of $35.00 million. This investment aims to provide MicroAlgo with working capital for growth and R&D, while maintaining the parent-subsidiary relationship. The note includes a conversion feature into MicroAlgo's Class A ordinary shares at a 60% discount to the market price and a ten-year lock-up agreement, indicating a long-term commitment.

Competitive Landscape and Strategic Positioning

WiMi Hologram Cloud operates within a fragmented and evolving competitive landscape, particularly in the holographic AR market. The company's primary competitive advantages stem from its technological expertise in holographic AR, a robust portfolio of patents and trademarks, and a first-mover advantage in the Chinese holographic AR market, which has allowed it to establish a strong brand presence and customer base. Strategic partnerships with leading technology companies further enhance its market reach and access to new technologies.

In the holographic AR advertising segment, WiMi competes against both specialized holographic AR advertisement producers and traditional advertisement producers. Its holographic AR entertainment products face competition from online game service providers and other digital marketing service providers. The semiconductor business also operates in a highly competitive industry.

When compared to global tech giants, WiMi's positioning becomes clearer. Against Meta Platforms, Inc. (META), which boasts a vast global user network and a broad AR/VR ecosystem, WiMi offers more specialized, niche, China-focused solutions. While Meta benefits from unparalleled scale and data analytics, WiMi's integrated semiconductor and holographic technology may offer greater efficiency in localized content production and a more immersive user experience in specific applications.

Microsoft Corporation (MSFT), with its enterprise-focused AR solutions like HoloLens and extensive cloud integration via Azure, presents a different competitive dynamic. WiMi's offerings in semiconductor-related products and AR entertainment may provide more affordable or specialized solutions for consumer markets, potentially with faster processing in holographic applications, though they lack the enterprise-grade integration and scalability of Microsoft's ecosystem.

Snap Inc. (SNAP) focuses on software-based AR filters and advertising within its social platform, targeting younger demographics. WiMi's holographic AR advertising solutions, with their advanced visual capabilities such as 3D object insertion in videos, potentially provide a qualitatively richer user experience for entertainment and advertising. WiMi's semiconductor expertise enables comprehensive solutions that could be more durable or efficient in certain applications, differentiating it from Snap's lighter, app-centric approach.

Overall, WiMi holds a niche position, strong in emerging applications within China, but it trails larger competitors in global reach, financial robustness, and market penetration. Its technological differentiation, particularly in quantum computing, could be a significant differentiator, offering substantial growth if these technologies are successfully commercialized. However, its China-centric operations expose it to regional regulatory risks, and its financial metrics, while improving, are generally less robust than those of its larger, more diversified global rivals.

Outlook and Risks

WiMi's outlook is closely tied to its continued innovation in holographic AR and quantum computing. The company anticipates future applications of its quantum machine learning framework in critical sectors like medical data analysis and financial risk assessment as quantum technology matures. Management expects its quantum algorithms for large-scale machine learning models to revolutionize various fields, including accelerating image and video processing and improving natural language understanding, while also contributing to sustainable development through reduced energy consumption. The company has explicitly stated its intention to fully utilize public capital markets to further strengthen its holographic technology research and development and drive business growth.

Despite the promising technological roadmap, investors must consider several risks. The convertible note transaction with MicroAlgo Inc. (MLGO) poses a significant risk of shareholder dilution due to the note's conversion feature, which allows conversion at a 60% discount to the lowest closing market price. Furthermore, the terms of this agreement are highly favorable to WiMi, raising concerns about potential conflicts of interest and negative impacts on minority shareholders of MicroAlgo. The nascent nature of quantum computing also presents commercialization challenges, as current quantum hardware limitations necessitate initial testing through simulations. While WiMi's strong cash position and manageable debt level offer a buffer, the highly competitive nature of the AR and semiconductor industries, coupled with its China-centric operations, could expose it to market fluctuations and regulatory shifts.

Conclusion

WiMi Hologram Cloud Inc. stands at a pivotal juncture, having successfully navigated a challenging financial period to achieve significant profitability and a robust cash position in 2024. This turnaround, coupled with aggressive investments in pioneering quantum and holographic technologies, forms the core of its compelling investment thesis. The company's strategic focus on developing advanced solutions like hybrid quantum-classical models for privacy, scalable quantum neural networks, and Quantum Random Access Memory positions it as a potential leader in future computing paradigms.

While WiMi operates in a competitive global landscape against well-resourced giants, its specialized technological expertise and first-mover advantage in the Chinese holographic AR market provide a distinct competitive edge. The ability to translate its R&D initiatives into commercially viable products and services will be critical for sustained growth and market share expansion. For discerning investors, WiMi represents an opportunity to participate in the high-growth potential of holographic AR and quantum computing, provided they are comfortable with the inherent risks associated with emerging technologies and the dynamics of its competitive environment. The company's ability to execute its ambitious technological roadmap and effectively manage its capital will ultimately determine its long-term success and value creation.