BEIJING (Reuters) – Chinese technology giant Tencent said on Wednesday it would boost capital expenditure in 2025, as it strengthens artificial intelligence development and infrastructure.
Tencent President Martin Lau told reporters in a post-earnings call that capital spending would rise to the “low teens” as a percentage of revenue, with AI as a key focus of strategic investments.
Capital expenditure for 2024 surged to $10.7 billion from $3.4 billion a year earlier, to reach 12% of total revenue, Lau said. The company spent 39 billion yuan ($5.4 billion) in the fourth quarter on AI initiatives.
“We will continue to increase our AI investments, increasing investment in our proprietary Hunyuan model while expanding our contributions in multimodal and open-source capabilities,” Lau said.
The escalated spending aligns with similar large-scale AI investments by China’s other tech leaders. Alibaba announced in February that it would allocate at least 380 billion yuan toward cloud computing and AI infrastructure over the next three years.
Meanwhile, ByteDance, TikTok’s parent company, has earmarked more than 150 billion yuan for capital expenditure in 2025, Reuters reported in January, largely focused on AI development and computing power.
However, Tencent’s “low teens” capital expenditure guidance for 2025 suggests that spending will remain flat as a percentage of revenue compared with 2024, indicating a slowdown in growth.
Chief Strategy Officer James Mitchell told analysts in a separate call that the substantial increase in 2024 spending should adequately address 2025 needs, noting that Tencent’s fourth-quarter capital expenditure exceeded that of any other listed Chinese tech company.
Lau said the spending plans could be adjusted upward if demand for services increases.
The company beat analyst expectations, posting revenue of 172.4 billion yuan ($23.83 billion) for the fourth quarter, up 11% on the year. Analysts had expected 168.9 billion yuan, according to LSEG data.
Net profit was 51.3 billion yuan, compared with analyst expectations of 46.3 billion yuan according to LSEG data.
The revenue growth was primarily fueled by robust performance in the gaming segment, as the company benefited from regulatory easing in China’s gaming sector following stringent restrictions in previous years.
For the quarter, domestic gaming revenue rose by 23% to 33.2 billion yuan, while international gaming revenue climbed 15% to 16 billion yuan.
Tencent has accelerated its AI initiatives in recent months, notably becoming the first major Chinese tech company to integrate technology from DeepSeek, the Chinese AI startup that gained prominence after releasing AI models that rival Western counterparts at substantially lower development costs.
The DeepSeek integration has been rolled out across Tencent’s core products, including WeChat – the company’s flagship messaging and payment platform with over one billion active users – and Yuanbao, Tencent’s proprietary AI assistant.
AI assistant Yuanbao has gained significant traction following the DeepSeek integration, surpassing DeepSeek’s own app to become China’s most downloaded iPhone application in early March.
Daily active users for the platform rose by more than 20-fold in the February-March period, leadership said in the post-earnings call.
Beyond third-party partnerships, Tencent continues to advance its proprietary AI development, anchored by its Hunyuan large language model.
Last month, the company launched an upgraded version of Hunyuan called Hunyuan Turbo S, which it said can answer queries faster than DeepSeek’s flagship R1. And this week, it unveiled a suite of new AI tools capable of converting text and images into 3D visuals.
($1 = 7.2357 Chinese yuan)
(Reporting by Liam Mo and Brenda Goh; Editing by Kate Mayberry, Bernadette Baum and Louise Heavens)
