Tencent ramping up AI spending after reporting fastest revenue growth in over a year

Tencent Holdings Ltd. is planning to significantly increase its spending on AI infrastructure after reporting its fastest revenue growth in more than a year.

Tencent ramping up AI spending after reporting fastest revenue growth in over a year

Tencent Holdings Ltd. is planning to significantly increase its spending on AI infrastructure after reporting its fastest revenue growth in more than a year.

The Chinese tech giant reported an 11% rise in revenue to 172.5 billion yuan ($23.8 billion) for the quarter ending in December. Net income nearly doubled, with the company announcing plans to buy back at least HK$80 billion in shares and proposing a 32% increase in its annual dividend for 2025.

Shares of Tencent’s major shareholder Prosus NV were up more than 2% in Europe on the news.

Unlike rival Alibaba Group Holding Ltd., which is aggressively pursuing the development of AI tools, Tencent’s billionaire founder Pony Ma said a more balanced approach is required.

That means using both in-house developed models and open-sourced models. That’s the same approach Tencent has taken with games, publishing both its own proprietary titles and those from third-party developers.

Tencent is looking to commercialise AI by improving services like advertising and WeChat, while also spending around 10 percentage of its revenue on capital expenditures. Analysts are projecting revenues of over $10 billion for 2025, meaning that spending on infrastructure could exceed $1 billion.

“The AI space is still very early,” Lau said. “Our consumer-facing applications will become more powerful products.”

In the last quarter of 2024, Tencent also ramped up its purchases of AI chips to meet rising demand. That’s expected to boost growth in revenue from the cloud, despite the company navigating US restrictions on advanced semiconductors from Nvidia Corp. that are crucial for AI development.

DeepSeek, a new service from Tencent that helps companies find and deploy AI solutions, has shown that breakthroughs can be achieved at lower costs, Chief Strategy Officer James Mitchell said. Tencent is focusing on “high-value” use cases.

Tencent is among the major Chinese tech firms reporting earnings during a pivotal season for the trillion-dollar sector.

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