(Bloomberg) – Tencent Holdings Ltd. has outlined plans to sharply raise spending on AI infrastructure after declaring its fastest revenue growth since 2023.
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For the three months ended December, revenues rose to 172.5 billion yuan ($23.8 billion) over 11%, but net profit almost doubled. The company also announced plans to buy back at least $80 billion worth of shares, suggesting a 32% increase in its 2025 annual dividend.
Tencent last month sketched a more measured approach to artificial intelligence than Arch-Foe Alibaba Group Holding Ltd. Billionaire founder Pony Ma explained how Tencent had “careful consideration” to rely on both internal and open source models.
Tencent plans to commercialize AI by strengthening its services such as advertising and WeChat, and is spending research on maintaining the pace of Alibaba and Deepseek, which emerged in January. Tencent plans to exceed $10 billion in 2025 revenues to capital expenditures, including AI infrastructure, this year based on analysts’ forecast sales.
“AI is actually in a very early stage, so it’s really hard to talk about what the final state looks like,” President Martin Lau said at a briefing after speaking to analysts. However, each of Tencent’s consumer applications “continue to evolve into a highly useful and powerful product for users.”
Tencent responded to increased demand by increasing purchases of AI chips in the final quarter of 2024. The company focuses on our limitations on the most powerful Nvidia Corp. semiconductors. Chief Strategy Officer James Mitchell said Deepseek has demonstrated that breaksthrough can be achieved in less ways, and that Tencent itself prioritizes “high-value” use cases.
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Tencent is one of China’s main technology names to report this week, summarizing the closely monitored revenue season for the trillion dollar sector that closes the corner.
Last month, President Xi Jinping met with prominent entrepreneurs, including Tencent Chief MA and Alibaba co-founder Jack MA, signaling Beijing’s soft stance on the private sector that he attacked for three years. It also features a new generation of founders representing industries such as chipmaking, electric vehicles and AI, reflecting XI’s priorities during the technological showdown against the US.
The symposium came just weeks after Hangzhou-based Deepseek launched a model comparable to Openai, bringing much less computing resources.
Chinese startup R1 has sparked a soul quest amongst Chinese tech giants. He is now raising more upgrade releases for similar models and raising investments in AI infrastructure. Alibaba has made one of the most dramatic moves by pledging to spend more than $50 billion on AI and cloud computing networks over the next three years. The CEO of e-commerce pioneer has declared that artificial general information – human-like AI capabilities – is the current “primary purpose.”
Tencent has so far won around 30% or $140 billion in market valuations this year. But it lags behind the jump of more than 70% of Arch Rival Alibaba’s stock, where the Qwen model supports one of the more popular AI services in the country.
What Bloomberg Intelligence says
Tencent’s unchanged focus on using artificial intelligence internally, especially in advertising and video games, is more likely to generate immediate recall than colleagues. Tencent’s 4Q Outlook Statement doesn’t have the big bang approach to AI seen by Alibaba. It focuses on cloud computing and certain long-term opportunities for artificial general information (AGI). Tencent has confirmed that it has reorganized its AI team to reduce its focus.
– Robert Lee and Jasmine Ryu, analyst
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Tencent is catching up. DeepSeek’s open source model has been integrated into services such as WeChat Search and Chatbot Yuanbao. Along with Peacekeeper Elite, one of Tencent’s two biggest game titles, Deepseek forms the basis for a new virtual assistant that teaches players how to shoot. On Tuesday, we will release an AI service that turns text or images into 3D visuals and graphics, streamlining the potentially long and costly studio development process.
“Tencent has historically been caught up in later stages, narrowing down market share gaps and outpacing the first movers backed by a unique Wechat ecosystem,” Goldman Sachs analysts, including Ronald Keung, wrote in a note before the results. Super apps like Wechat and Bytedance Ltd.’s Douyin are best positioned to take advantage of AI applications or agents opportunities, they said.
With over 1 billion users, WeChat remains Tencent’s most reliable asset as it assumes a bigger monetization role, from advertising to mini-games to online commerce. It also reflects the economic environment through services such as rides and meal delivery, but is a fintech division that incorporates the payment network as Tencent’s most stagnant unit.
Tencent scored last year with the game release from Nexon Co.’s Dungeon & Fighter Mobile to its own PC shooter, Delta Force.
However, there is no guarantee that the feat will be repeated in 2025. Tencent has joined the global team to significantly reduce development work, focusing on fewer key titles. That pipeline remains strong with a few hits, including King Honor: The World, Monster Hunter Outlanders, and the Chinese release of the Goddess of Victory: Nikke.
– Supporting Vlad Savov, Claire Che, Luz Ding, Debby Wu and Charlotte Yang.
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