Chinese technology giant Tencent bets on AI.
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Analysts say Chinese internet giant Tencent plans to introduce more AI-related features and products to grow growth as the company reports a series of results for the last quarter of 2024. It is possible to transform its WeChat messaging service into an AI-powered super application with a lot of new features.
During a call with media and analysts Wednesday, Tencent’s billionaire chairman, President Ma Pony, Martin Law, and other executives outlined the AI strategy of gaming and social media behemoths. The technology is already improving the company's bread and fuel gaming business, which is using AI to guide new players and deliver better matches in online battles, they say. In advertising, AI is helping Tencent analyze consumer behavior and place targeted promotions.
In the last three months of 2024, overall revenue grew 11% from expected, up to RMB 172.4 billion (US$24 billion) year-on-year, the company said. Shareholders' profit was RMB 51.3 billion, up 90%, up 90% from profits in the fourth quarter of 2023.
Tencent's Hong Kong-listed stocks are nearly 30% this year, as DeepSeek released a highly affordable model that shocked the Silicon Valley in January. Capital expenditure will be a “low percentage of teenagers” in 2025 sales as Tencent increases AI-related spending, executives said in a call yesterday.
Previously, capital expenditure was a “high unit” of Tencent’s income, according to Charlie Chai, a Shanghai analyst at research firm 86 Research. Chinese tech giants need more graphics processing units (GPUs), a chip used to process AI data.
Capital expenditure rose 386% year-on-year to RMB 36.6 billion, executives said yesterday. They added that more computing power may be needed this year.
The company faces fierce local competition. Technology giants like Alibaba and Bytedance both offer chatbots and AI assistant apps to the huge Chinese consumers as they try to connect them with free services. Last week, Alibaba released Quark AI Assistant. In February, it announced it would invest at least 380 billion yuan in the next three years and use it for cloud computing and AI-related infrastructure.
Tencent is promoting its Yuanbao AI Assistant app. Using its self-developed Hunyuan model and DeepSeek's R1 inference model, the chatbot can answer questions, search the internet, generate summary and answer voice calls. According to Dutch ranking website AICPB.com, it is the fifth most popular AI product in China in February, with 13 million active users per month.
Yuanbao is just one way for Tencent to attract users. In February, the company began merging AI-based search capabilities in WeChat, which has nearly 1.4 billion users. During an analyst call yesterday, Law said Tencent may create a tailored AI agent for messaging services.
Digital Assistant can connect to various functions in WeChat, called mini programs. Those embedded services allow users to shop, read, buy air tickets and play games without leaving the WeChat platform. Law said Tencent can “easily” agents associated with various mini programs to perform complex tasks.
He did not provide a timeline for such products. Executives said on a phone call yesterday that Tencent’s AI efforts may continue to be powered by its own Hunyuan model as well as external products, as different models excel at different tasks.
The ultimate goal may be to create an AI-based superapp, and among all the tech giants in China, Tencent may have the best chance because it has a large number of users on a variety of consumer-facing applications, said Shawn Yang, a senior research analyst at Hong Kong in Hong Kong. Lao said Tencent may also integrate more AI capabilities into its QQ messaging service, which has more than 500 million active monthly users.
“I think we’re going to see more and more AI…products,” Law said on the phone. “At the same time, every product will continue to evolve.”
