The China Mail - China's Tencent sees profits surge as AI drive accelerates

The publication of quarterly and annual results came after weeks of robust investor confidence in Chinese technology stocks, and in AI in particular, following January's shock emergence of local startup DeepSeek on the global stage.

Shenzhen-based Tencent is the operator of China's all-purpose WeChat app and a major player in the global gaming industry.

Its net profits in the three months ending on December 31 totalled 51.3 billion yuan ($7.1 billion), up 90 percent year-on-year, according to a statement on the Hong Kong Stock Exchange website.

The statement also showed that Tencent's revenue in the period reached 172.4 billion yuan, a rise of 11 percent year-on-year that outpaced a Bloomberg forecast.

Tencent CEO Pony Ma said the double-digit revenue growth was down to using AI to enhance the firm's advertising platform, higher video account engagement and growth in its gaming arm.

He said Tencent had "reorganised our AI teams" around fast product innovation and deep model research, while also boosting AI-related spending.

Tencent brought in revenue of 660.3 billion yuan for the whole year, increasing eight percent from 2023.

Net profits jumped 68 percent to 194.1 billion yuan.

The strong results came after the company's stock price soared this month to its highest level in nearly four years.

- AI frenzy -

Chinese tech giants have been funnelling resources into the competitive field of AI since the release of DeepSeek's chatbot in January.

The little-known Chinese company caused a global stir because it appeared to have developed the chatbot at a fraction of the price of Western industry leaders such as the United States's OpenAI.

Ma told a news conference on Wednesday that Tencent had "actively embraced" DeepSeek across multiple services.

"I think it's a very great thing. We have a lot of respect for them and we also embrace them," Ma said.

Tencent said last month that it had started trialling its own AI reasoning model called "Hunyuan Thinker", which will offer a more "professional" format for answering questions and a more "human" writing style.

Rival Alibaba also said it would spend more than $50 billion on AI and cloud computing over the next three years.

Investors were also heartened by a rare meeting last month between Chinese President Xi Jinping and a gathering of prominent entrepreneurs that included Tencent's Ma.

However, the company continues to face challenges, including a sluggish domestic economy and political pressure from Washington.

In January, US authorities added Tencent to a list of firms it says are affiliated with Beijing's military.

Tencent described the move as a "mistake" and China's foreign ministry accused Washington of "suppression".

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