Shares of Tencent Holdings Ltd climbed to their highest level since 2021 following the launch of DeepSeek, an artificial intelligence (AI) service that has disrupted the industry since its introduction earlier this year, on Tencent’s WeChat social media platform. The Shenzhen-based company announced that it is incorporating DeepSeek’s AI model into WeChat search. Tencent is joining a growing number of government agencies and service providers in China that are adopting DeepSeek’s technology. This development has bolstered investor confidence in Tencent’s future, especially after a successful year of game releases that has seen its stock rise by over 70%.
The surge in Tencent’s stock comes as investors flock to Chinese tech stocks, fueled by speculation about a possible meeting this week between President Xi Jinping and e-commerce pioneer Jack Ma. This anticipated endorsement of the private sector comes alongside a recent upswing in Hong Kong equities, driven by advancements in AI technology. Goldman Sachs analysts, including Kinger Lau, noted in a report that “widespread AI adoption could enhance Chinese earnings per share (EPS) by 2.5% annually over the next decade.” However, they emphasized that while AI presents significant growth potential for China, robust policy stimulus is still necessary to tackle persistent macroeconomic challenges and ensure sustained gains in the equity market.
The launch of DeepSeek’s R1 reasoning chatbot on January 20 has had a transformative impact on global stock markets, erasing over a trillion dollars in value from US-listed companies heavily investing in advanced AI hardware. In China, it has sparked a rally worth approximately US$1.3 trillion (RM5.8 trillion), as investors anticipate further innovations, though this increase has not been uniform across the board. For instance, Baidu Inc., which is also integrating DeepSeek into its search offerings, saw its shares drop by more than 5% in Hong Kong on Monday.
