Tencent Holdings Ltd.’s stock hit its highest point since 2021 after the company introduced DeepSeek, an artificial intelligence (AI) service that has made waves in the tech industry this year, to its WeChat platform. The Shenzhen-based tech giant confirmed that it is integrating DeepSeek’s AI model into WeChat search, signaling a strategic move to enhance its services with cutting-edge AI technology. This marks Tencent’s entry into the growing wave of Chinese businesses, government agencies, and service providers that are embracing DeepSeek’s software.
The announcement has boosted investor confidence in Tencent’s future, with the company benefiting from strong game releases over the past year, which have driven a remarkable 70% increase in its stock price.
Meanwhile, Tencent’s rival, Baidu Inc., also incorporating DeepSeek into its own search product, saw its shares fall by up to 8.8% in the afternoon. The decline is largely attributed to profit-taking ahead of Baidu’s earnings report scheduled for Tuesday.
Tencent’s stock rally comes as Chinese tech stocks gain momentum, fueled in part by a high-profile meeting between President Xi Jinping and e-commerce magnate Jack Ma on Monday. This display of support for the private sector aligns with the broader surge in Hong Kong equities, which have been propelled by significant advancements in AI technology.
Goldman Sachs analysts, including Kinger Lau, highlighted the potential impact of AI on China’s economic growth, estimating that widespread AI adoption could boost Chinese earnings per share (EPS) by 2.5% annually over the next decade. However, the analysts caution that while AI holds promise, robust policy stimulus is still required to tackle macroeconomic challenges and ensure sustainable equity growth.
DeepSeek’s January 20 launch of its R1 reasoning chatbot has had a transformative effect on global stock markets, erasing more than a trillion dollars from the value of US-listed companies heavily invested in AI hardware. In China, the debut has driven a $1.3 trillion rally, as investors remain optimistic about the potential for future AI advancements, though the gains have not been evenly distributed.
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