BEIJING ― Chinese gaming and social media leader Tencent Holdings said its investment in artificial intelligence (AI) has yet to turn into significant revenue and may take several quarters to have a meaningful impact on earnings.
Tencent has intensified AI efforts over the past two years, developing services for large-language model training and deployment. It has also launched Yuanbao, a chatbot powered by its proprietary Hunyuan LLM.
The company and fellow Chinese tech giants have poured billions of dollars into AI development in a race to launch ChatGPT-like services but monetization remains a challenge.
“There are… fewer AI startups in China which are actually buying a lot of compute [power]… The AI revenue in China on the cloud side is somewhat at scale for us, but I think it will not be exploding like in the US,” Tencent President Martin Lau said on a post-earnings call with analysts late on Wednesday.
Tencent has deployed AI to enhance its products, such as by offering more targeted advertising, but these initiatives have not generated significant revenue and may take several quarters before related earnings reach a meaningful scale, Lau said.
Domestic peers Baidu and Alibaba, which have also invested heavily in AI, report earnings in coming days.
Shares in Tencent, the world’s largest video game company and operator of the WeChat messaging platform, rose 1.54 percent in Hong Kong trading on Thursday.
The company reported revenue of 167.19 billion yuan ($23.14 billion) for the quarter ended Sept. 30, in line with the 167.8 billion yuan average of analyst estimates compiled by LSEG.
Domestic gaming revenue rose 14 percent to 37.3 billion yuan, extending the previous quarter’s 9-percent growth which in turn followed 2 quarters of decline. International gaming revenue increased 9 percent to 14.5 billion yuan.
Gaming growth was driven partly by “Dungeon & Fighter Mobile,” a marquee title launched in May, and helped by shooting game “Delta Force,” released in September.
Its investment portfolio was boosted by the August release of “Black Myth: Wukong,” a globally successful game based on the Chinese classic “Journey to the West” from a developer in which Tencent owns a stake.
As part of a gaming expansion strategy, CSO James Mitchell said it aims to discover and invest in more game studios like the developer of “Black Myth: Wukong” while continuing to leverage its own studios.
Tencent’s fintech and cloud services reported modest growth of 2 percent to 53.1 billion yuan, with its payments business declining in part due to weak consumer spending in China.
Revenue from marketing services ― formerly known as online advertising ― grew 17 percent to 30 billion yuan.
Net income rose 47 percent to 53.23 billion yuan versus the 52.89 billion yuan average of analyst estimates compiled by LSEG.
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