Tencent Bets on DeepSeek AI: Weixin Integrates External Technology for New Growth Impetus

2/21/2025, 10:22 AM

Through collaboration with DeepSeek, Tencent aims to expand its AI offerings, despite foregoing in-house models and full control.

Eulerpool News Feb 21, 2025, 10:22 AM

Tencent makes a U-turn in AI and will integrate DeepSeek's large language model technology into its messaging and social media platform Weixin (China's domestic version of WeChat). The company, covering 93 percent of the Chinese messaging market with 1.4 billion users, is thus abandoning the use of its own AI models. The background is expansion plans and the opportunity to catch up in the rapidly growing cloud business, where Tencent is significantly behind Alibaba and Huawei Cloud.

Meanwhile, AI has long been a growth driver for Tencent: The conglomerate's profit climbed by 47 percent in the third quarter, surpassing expectations. In particular, revenue in the advertising business rose by nearly one-fifth to $4.1 billion, driven by AI-supported advertising formats and improved user data. The idea behind this: More interaction generates more data, which in turn refines AI algorithms. In the rapidly growing Chinese cloud industry, DeepSeek technology could also serve as a unique selling proposition, as companies increasingly demand AI innovations.

The announcement effect caused Tencent's share price to rise by 15 percent within a week, resulting in a total recovery of almost 80 percent in market value over the year. With a valuation 19 times the expected earnings, it is higher than that of rivals like Alibaba — a reflection of the market expectation that AI-based services, from search to cloud, will open up new revenue streams for Tencent in the future. By relying on DeepSeek instead of its own AI platforms, the company deliberately chooses a flexible partner model: although it loses direct control, it hopes to shape China's rapidly evolving AI landscape with the help of external technology.

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