To The Moon

Here’s my take on Tencent’s AI push, its stock trajectory, and how it stacks up versus Alibaba in the race for China’s tech crown.

---

1. When might Tencent break out to new highs?

What gives me confidence it could:

Fast AI rollout through WeChat + DeepSeek. Tencent has embedded the DeepSeek-R1 model into WeChat search and its Yuanbao AI app. DeepSeek, as a low-cost, open or semi-open model with strong reasoning and contextual understanding, gives Tencent a big advantage in quickly turning AI into product features and monetisation across its massive user base. 

Strong recent earnings supported by AI-inflected growth. In Q2 2025 Tencent saw 15% YoY revenue growth and 18% growth in non-IFRS operating profit; its gaming business, especially Honor of Kings, and marketing services benefitted from upgrades to its AI models and ad-serving systems. 

Capital discipline + shareholder returns. Tencent is running a significant share buyback program while also investing heavily in AI infrastructure. 

Ecosystem moat. With over a billion WeChat users and deep vertical integrations (social, payments, mini-programs, games, enterprise cloud), Tencent has perhaps the most resilient super-app + AI flywheel in China.

But the risks are real:

Regulatory uncertainty remains a wildcard, whether in gaming, fintech, data privacy or AI content moderation.

Execution risk: embedding AI into products is one thing, monetising it sustainably (especially when users expect free or low-cost AI services) is another.

Competition from Alibaba, ByteDance and Baidu—and increasingly nimble Chinese AI specialists—means speed and agility matter a lot.

Market sentiment: Chinese tech stocks remain sensitive to geopolitical risk, macro headwinds, and capital outflows, which could delay or mute a breakout even if fundamentals improve.

Timing estimate:

If AI monetisation continues to show up concretely in Tencent’s financials (stronger ad ARPU, game ARPU uplift, Yuanbao monetisation, enterprise AI/cloud growth) and the broader China tech sentiment stabilises, I think it’s reasonable to expect a breakout above HK$700–750 sometime in the next 12–18 months, with a potential full reclaim of its old high (HK$692-plus) and then incremental upside into HK$750–900 territory.

If sentiment turns negative again—or if AI rollouts disappoint—that breakout could be delayed into 2026 or more muted.

---

2. Can Tencent become China’s “tech king”?

Tencent has a strong case:

Its AI-first strategy is deeply integrated into a giant super-app ecosystem (WeChat, games, fintech, enterprise services).

It has strong cash flow and capital discipline, which gives it flexibility to invest in AI infrastructure without jeopardising shareholder returns.

Its consumer reach is arguably unmatched in China, and AI product integration (search, chat, gaming, ads, mini-apps) offers a practical way forward without betting everything on “general-purpose AI” alone.

That said, “tech king” is a high bar. It will depend on:

Whether Tencent can keep innovating (and executing) while staying agile amid regulatory scrutiny.

How well it can push AI monetisation from experimentation to core financial drivers.

Whether the competition (particularly Alibaba in cloud and enterprise AI, ByteDance in content and consumer AI, and Baidu in foundational models/search) manages to outpace or leapfrog Tencent in some domains.

If Tencent succeeds at turning AI-augmented engagement into resilient monetisation (especially in gaming, ads, and enterprise services) while maintaining its ecosystem advantage, then yes—I think it has a strong shot at reclaiming or holding “tech king” status in China.

---

3. Tencent vs Alibaba in the China AI race — which side am I on?

If I had to pick, I lean Tencent, for the following reasons:

Factor Why Tencent edges it

Distribution & engagement WeChat is one of the deepest and stickiest super-apps. AI features rolled out inside WeChat tap into hundreds of millions of daily users with minimal friction. 

Flywheel potential Tencent’s AI upgrades are directly feeding enterprise services, ads, gaming, mini-program UX, and possibly fintech/WeChat Pay. That creates a real cycle: more engagement → better models → better UX or monetisation → more engagement.

Financial discipline Tencent appears to be balancing investment in AI infrastructure with share buybacks and has enough cash flow to sustain long-term CAPEX without wrecking capital discipline. 

Fast-follower + partner model Tencent has shown it can absorb external breakthroughs (e.g. DeepSeek) rapidly, rather than insisting on building everything in-house. This may allow it to be more nimble and avoid over-investment or missteps in foundational AI.

That said, Alibaba remains a formidable challenger:

Strong presence in cloud infrastructure, enterprise AI, e-commerce AI models (e.g. logistics, recommendation, supply-chain optimisation), and increasingly in AI-driven consumption (smart retail, smart logistics, etc.).

Alibaba’s vertical integration of enterprise AI + cloud + business applications is a serious moat in B2B/industrial AI.

In a world where AI becomes not just consumer chatbots but pervasive automation, recommendation, logistics, supply-chain intelligence, and enterprise services, Alibaba might ultimately win more of the “industrial AI” wars. But if the path to China’s AI future is driven by consumer engagement and embedding smarter interfaces into existing apps at scale, Tencent has a real advantage.