Tencent Holdings Ltd. outlined plans to dramatically increase spending on artificial intelligence infrastructure after the Chinese company recorded the highest revenue growth rates since 2023, indicating that the most valuable firm in the Asian country intends to keep pace with competitors in the so-called post-DeepSeek era.
Tencent’s revenue in the last three months of 2024 was 172.5 billion yuan ($23.8 billion). This figure increased by 11% compared to the reading recorded for the same period in 2023.
The company’s adjusted net income reached $7.7 billion in the last quarter of 2024. This indicator showed an increase of 30% year-on-year.
Moreover, Tencent proposed to raise its annual dividend for 2025 by 32%. The value stocks of Posus NV, a major shareholder of the company, grew by more than 2% in Europe.
Tencent takes a more balanced approach to artificial intelligence than its main competitor Alibaba Group Holding Ltd., which last month said it was going all-in as part of AI development.
Tencent billionaire founder Pony Ma stated that the company made careful consideration to rely on both in-house and open-sourced artificial intelligence models. In this case, the practice is repeated, in which the firm publishes both its own and third-party games.
Tencent plans to commercialize artificial intelligence by expanding services such as advertising and WeChat. Also, in the context of corresponding efforts, the company intends to invest in research in the area of machine intelligence to keep up with Alibaba and DeepSeek. It is worth noting that in January, DeepSeek’s artificial intelligence model became something of a sensation in the global AI industry. This company has developed a highly efficient machine intelligence system that can fully compete with similar digital products from Western brands and at the same time requires less costs for elaboration. The example of DeepSeek demonstrated that the evolvement of artificial intelligence does not necessarily involve huge financial injections.
Tencent intends to devote a low-teens percentage of its 2025 revenue towards capital expenditures, including machine intelligence infrastructure. In this case, it means an amount of more than $10 billion. This is a preliminary indicator based on analysts’ forecasts regarding Tencent’s earnings in the current year.
Martin Lau, president of the company, told analysts on a post-results briefing that artificial intelligence is actually at a very early stage, which is why it’s hard to talk about what the eventual state will be. In this context, it is worth noting that there is still no definitive understanding of the limits of digital intelligence. Artificial intelligence has already demonstrated a high-quality ability to process huge amounts of information and generate original content. AI is also gradually becoming a working tool in various industries. Futurological forecasts provide that artificial intelligence in the process of technological evolution will surpass the human mind in terms of cognitive abilities. It is possible that AI will become something like a new form of thinking development in a global context. At the same time, these are assumptions, and it is not yet known exactly what the limits of the capabilities of artificial intelligence are.
Martin Lau stated that each of Tencent’s consumer-facing apps will continue to evolve into a very useful and even more powerful product for users.
Tencent ramped up its purchases of artificial intelligence chips in the last quarter of 2024 to serve increased demand. Executives expect that these actions will contribute to faster revenue growth from cloud technologies. The company is also currently working on a solution that will allow it to cope with the effects of restrictions imposed by the United States on shipments of Nvidia’s most powerful semiconductors to China. This factor, which is a kind of result of the present geopolitical situation, may become a barrier to the technological development of many firms from an Asian country. Tencent chief strategy officer James Mitchell stated that DeepSeek demonstrated how breakthroughs for less can be achieved. It was also noted that the company itself was prioritizing high-value use cases.
Tencent is one of the largest Chinese technology firms demonstrating significant interest in the area of artificial intelligence. It is worth noting that against the background of the current geopolitical state of affairs for Beijing, technological sovereignty is not something that could exist and at the same time something that can be dispensed with, but is in fact an existential necessity in terms of opportunities for further development. The United States and some of its allies have limited shipments of advanced chips and equipment to manufacture microcircuits of the appropriate category to an Asian country. Based on this, China should obviously think about the formation of an autonomous domestic technology sector, both in terms of several developments and within the production process and supply chains.
President of the People’s Republic of China Xi Jinping last month held a meeting with prominent entrepreneurs, including Tencent chief Pony Ma and Alibaba co-founder Jack Ma. Many experts and analysts drew attention to this meeting, as it became a landmark indication that Beijing, as a political center, is softening its position towards the private sector. Over the past three years, the Chinese authorities have demonstrated an extremely tough approach in their interaction with the mentioned sector. Representatives of the new generation of founders, including from areas such as chip manufacturing, electric vehicles, and artificial intelligence, also participated in the meeting with Xi Jinping last month. Many experts described this fact as a signal of Beijing’s priorities in the context of the already-begun technological confrontation with Washington.
It is also noteworthy that the mentioned meeting was held a few weeks after DeepSeek, based in Hangzhou, launched the R1 artificial intelligence model. This digital product can compete with similar functional systems from OpenAI, but at the same time requires much less computing resources.
R1 has become a kind of impetus for rising competition in the Chinese artificial intelligence industry. Currently, in an Asian country, most technology companies either ramp up the release of machine intelligence models or increase the volume of financial injections into the relevant area. As part of this process, Alibaba has made the most decisive move. The company pledged to spend over $50 billion on its artificial intelligence and cloud computing networks over the next three years. Alibaba also stated that its goal is artificial general intelligence. AGI does not have a single definition, but the two main interpretations of the term stipulate that it is a configuration of digital intelligence that has cognitive abilities either superior to the human mind or equal to it. Alibaba sets maximum goals for itself in the development of artificial intelligence.
As we have reported earlier, Alibaba Releases New Version of Its AI Model.
