Tencent Speeds AI Spending After Sales Grow Fastest in Years

Bloomberg News

Wed, Mar 19, 2025, 7:37 AM 5 min read

(Bloomberg) -- Tencent Holdings Ltd. outlined plans to sharply raise spending on AI infrastructure after posting its fastest pace of revenue growth since 2023, showing that China’s most valuable company is intent on keeping pace with rivals in the post-DeepSeek era.

Most Read from Bloomberg

• Washington, DC, Region Braces for ‘Devastating’ Cuts from Congress

• NYC Plans for Flood Protection Without Federal Funds

• Despite Cost-Cutting Moves, Trump Plans to Remake DC in His Style

• A Malibu Model for Residents on the Fire Frontlines

• The Scary Thing About the Wildfire That Was Stopped

Revenue rose a better-than-projected 11% to 172.5 billion yuan ($23.8 billion) for the three months ended December, while net income almost doubled. The company also unveiled plans to buy back at least HK$80 billion worth of shares and proposed a 32% hike in its annual dividend for 2025. Shares in Prosus NV, a major shareholder, climbed more than 2% in Europe.

Tencent sketched out a more measured approach to artificial intelligence than arch-foe Alibaba Group Holding Ltd., which last month declared it was going all-in on AI development. Billionaire founder Pony Ma described how Tencent made the “careful consideration” to rely on both in-house and open-sourced models — in much the same way it publishes both its own and third-party games.

Tencent intends to commercialize AI by beefing up services such as advertising and WeChat, while spending on research to keep pace with Alibaba and DeepSeek, whose emergence in January galvanized global AI development. Tencent plans to devote a low-teens percentage of its 2025 revenue toward capital expenditures, including on AI infrastructure — more than $10 billion, based on analysts’ projected sales this year.

“AI is actually in a very early stage, so it’s really hard to talk about what the eventual state would look like,” President Martin Lau told analysts on a post-results briefing. But each of Tencent’s consumer-facing applications “will continue to evolve into a very useful and even more powerful product to users.”

Tencent ramped up its purchases of AI chips in 2024’s final quarter to serve increased demand, which should translate into faster cloud revenue growth, executives said. The company is working around US restrictions on the most powerful Nvidia Corp. semiconductors. Chief Strategy Officer James Mitchell said DeepSeek however has demonstrated how it’s possible to achieve breakthroughs for less, and Tencent itself was prioritizing “high-value” use cases.

Click here for a liveblog on the results.

Tencent is among the major Chinese tech names to report this week, wrapping up a closely watched earnings season for a trillion-dollar sector that’s rounding a corner.