Tencent says it could make instant profits on $53B hardware splurge by renting it for AI workloads
Plans to build models instead because it thinks selling tokens will prove more lucrative in the long term
Chinese tech giant Tencent has invested $53 billion in a new business unit focused on AI and product integration, rather than seeking immediate profits. During the company's Q2 earnings call, Bernstein analyst Robin Zhu inquired about the expected return on investment from this expenditure. Chief Strategy Officer James Mitchell responded that Tencent could recover its depreciation costs "almost immediately" by renting out the company's computing infrastructure.
President Martin Lau explained that Tencent is targeting superior economic returns in the long term by developing its own state-of-the-art AI models and deploying popular AI applications in the Chinese market. This strategy aims to convert intelligence into superior economic returns through services such as WorkBuddy and CodeBuddy.
Tencent's latest model, Hunyuan-3, was released in July, with a promise of an even more capable Hunyuan-4 in the future. The company's Q2 revenue grew by 11% to $30.3 billion, with net profit increasing by 9% to $10.3 billion. Tencent's flagship messaging apps, Weixin and WeChat, saw an increase in average monthly active users to 1.349 billion.
However, investors remain uncertain about the company's stock price, which has declined since the earnings announcement.
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