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Tencent Shares Surge, Baidu Slides After DeepSeek’s WeChat Debut

(Bloomberg) -- Tencent Holdings Ltd.’s shares rose to their highest since 2021 after DeepSeek, the AI service that’s shaken up the industry since its emergence this year, debuted on the big tech company’s WeChat social media platform.

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Shenzhen-based Tencent is now integrating DeepSeek’s artificial intelligence model into WeChat search, the company said in a statement. The internet and games giant joins a wave of government bodies and service providers embracing DeepSeek’s software across China. The move helped lift confidence for Tencent’s prospects, following strong game releases that helped its shares rise more than 70% over the past year.

Baidu Inc., a Tencent rival that’s also building DeepSeek into its search product, plunged as much as 8.8% in the afternoon in part because of profit-taking ahead of its Tuesday earnings report.

Tencent’s rally comes as investors pile into Chinese Tech, energized by a meeting Monday between President Xi Jinping and e-commerce icon Jack Ma. The show of support for the private sector coincides with the recent surge in equities in Hong Kong, driven by growing capabilities in AI.

“Widespread AI adoption could boost Chinese EPS by 2.5% per year over the next decade,” Goldman Sachs analysts including Kinger Lau wrote in a note. “As promising as AI could be to China’s growth trajectory, we believe forceful policy stimulus is still required to address deep-rooted macro challenges and drive sustainable equity gains.”

DeepSeek’s release of the R1 reasoning chatbot on Jan. 20 has proven transformative for global stock markets, slashing over a trillion dollars in value from US-listed companies investing heavily in the most powerful hardware for AI development. It’s also driven a $1.3 trillion rally in China as investors bet on more advances to come, though the rise has not been uniform.