Tencent Holdings is poised for “long-term growth” from its aggressive spending on artificial intelligence (AI) as China’s most valuable tech giant aligns its future with DeepSeek and in-house models, according to analysts.
Tencent chairman and CEO Pony Ma Huateng said on Wednesday that he had talked with Liang Wenfeng, the founder of DeepSeek, and “admires” his firm for making “an independent, truly open-source and free product”, referring to DeepSeek’s models that are free to use and modify. Ma and Liang sat next to each other in the front row of a high-profile symposium chaired by President Xi Jinping last month.
Ma said Tencent has adopted a “double-core” strategy on AI that uses both DeepSeek and its own Yuanbao models, following an approach similar to how it has dominated the video gaming industry by promoting self-developed titles and those developed by independent studios. Tencent is expected to release its own reasoning model on Friday.
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Tencent president Martin Lau Chi-ping said on Wednesday that the company has boosted spending on AI infrastructure. Capital investment in the fourth quarter nearly quadrupled year on year to 36.6 billion yuan (US$5.1 billion), driven by purchases of graphics processing units “for inference needs”, the executive said, referring to how generative AI systems “think”.
News footage of DeepSeek Founder Liang Wenfeng (right) with Tencent’s Pony Ma to his right attending a symposium on private enterprises on February 17, 2025. Photo: Reuters alt=News footage of DeepSeek Founder Liang Wenfeng (right) with Tencent’s Pony Ma to his right attending a symposium on private enterprises on February 17, 2025. Photo: Reuters>
The tech giant, which at US$650 billion is China’s most valuable company, is proving to be a formidable player in China’s AI market. Its consumer-facing Yuanbao app saw the number of users increase 20-fold to become the third most popular app in China from February to March, rivalling ByteDance‘s Doubao and Alibaba Group Holding‘s Qwen. Alibaba owns the South China Morning Post.
HSBC analysts Charlene Liu and Ritchie Sun wrote in a research note that Tencent’s capital expenditure could reach 90 billion yuan this year, up from 77 billion yuan in 2024, as it steps up AI investment to grow its core businesses. That would make Tencent one of China’s biggest spenders on AI. Alibaba recently unveiled a plan to spend 380 billion yuan on AI infrastructure over the next three years.
