Tencent’s fourth-quarter profits for 2024 rose 90% to 51.3 billion yuan, driven by AI advancements and increased engagement in advertising and gaming sectors. The company’s annual revenue totaled 660.3 billion yuan, marking an 8% increase. Tencent acknowledges challenges from the domestic economy and political pressures, while also embracing competition from AI startups like DeepSeek.

On Wednesday, Tencent, the Chinese internet and gaming powerhouse, announced a remarkable 90 percent surge in profits for the fourth quarter of 2024. This growth is attributed to the company’s intensified focus on artificial intelligence (AI) initiatives. Following the emergence of AI startup DeepSeek, investor confidence in Chinese technology stocks has notably increased, particularly in AI-related sectors.

Tencent, headquartered in Shenzhen, is renowned for its multipurpose WeChat app and a significant presence in the global gaming arena. The company’s net profits for the quarter ending December 31 reached 51.3 billion yuan (approximately $7.1 billion), reflecting a substantial year-on-year increase. Additionally, Tencent’s revenue rose by 11 percent to 172.4 billion yuan, exceeding Bloomberg’s projections.

Pony Ma, CEO of Tencent, attributed the robust revenue growth to the strategic integration of AI enhancements within its advertising platform, increased engagement on video accounts, and an expanding gaming division. He highlighted the reorganization of their AI teams towards accelerating product innovation and intensive model research.

For the entire fiscal year, Tencent reported total revenue of 660.3 billion yuan, representing an eight percent increase compared to the previous year, alongside a 68 percent rise in net profits to 194.1 billion yuan. This positive performance has coincided with a notable increase in the company’s stock price, reaching its highest point in nearly four years.

The current AI landscape in China reflects a surge in competition, particularly following the debut of DeepSeek’s chatbot, which gained significant attention for its cost-effectiveness compared to established Western rivals like OpenAI. Ma expressed admiration for DeepSeek, stating, “I think it’s a very great thing. We have a lot of respect for them and we also embrace them.”

In a bid to advance their AI capabilities, Tencent recently initiated trials for its AI reasoning model, named “Hunyuan Thinker”, aimed at providing professional responses and a more human-like writing style. Concurrently, competitor Alibaba announced plans to invest over $50 billion in AI and cloud computing over the coming three years. Despite these advancements, Tencent faces obstacles, including a sluggish domestic economy and geopolitical tensions, particularly following its addition to a list of firms linked to the Chinese military by U.S. authorities, which Tencent has labeled a “mistake.”

Tencent’s significant profit increase is primarily driven by its aggressive expansion into AI technologies, which have bolstered the company’s advertising and gaming sectors. Despite flourishing financial results, Tencent must navigate ongoing challenges, including economic sluggishness and external political pressures. The competitive landscape in AI suggests that firms investing heavily in innovation stand to gain a substantial market advantage.

Original Source: www.france24.com

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