Chinese tech giant Tencent has integrated the AI model DeepSeek into its WeChat messaging app, joining other Chinese government agencies and service providers that have adopted the technology. This move has bolstered investor confidence in Tencent’s prospects, particularly after a series of successful gaming releases. Over the past year, the company’s shares have surged by more than 70%.
In contrast, Tencent’s competitor Baidu, which has also integrated DeepSeek into its search engine, saw its shares decline by 8.8% in afternoon trading. Analysts attribute this partly to profit-taking ahead of the company’s upcoming earnings report.
AI Adoption and Market Reactions
Investor enthusiasm for Chinese tech firms has been further fueled by Chinese President Xi Jinping’s meeting with Alibaba founder Jack Ma. This demonstration of government support for the private sector coincided with a surge in Hong Kong stocks, driven by the expanding AI sector.
According to Goldman Sachs analysts, “Broad adoption of AI could boost China’s EPS by 2.5% per year over the next decade.” However, they caution that while AI presents significant growth potential, strong policy incentives will be necessary to tackle deep-rooted economic challenges and ensure sustainable capital appreciation.
DeepSeek’s Global Impact
The release of DeepSeek R1’s reasoning model on January 20 had a profound effect on global stock markets, notes NIX Solutions. It led to a sharp drop in the valuation of top U.S. AI companies, erasing over a trillion dollars in market value. At the same time, Chinese stocks surged by $1.3 trillion as investors shifted their focus.
The continued integration of AI in major Chinese platforms signals ongoing advancements in the sector. We’ll keep you updated as more developments unfold.