Tencent Stock Soars on DeepSeek Integration, Buoyed by AI Optimism
Key Points:
* Tencent Holdings Ltd.'s shares surge to their highest level since 2021.
* DeepSeek AI service debuts on WeChat, boosting Tencent's prospects.
* Sentiment for Chinese tech stocks boosted by President Xi's support and AI advancements.
* Goldman Sachs forecasts a 2.5% annual EPS growth driven by AI adoption.
* DeepSeek's R1 chatbot has had a transformative impact on global markets.
Shenzhen-based Tencent has integrated DeepSeek's AI model into WeChat search, signaling its adoption by a major tech player in China. This move has boosted confidence in Tencent's future, following strong game releases that have driven its share price up over 70% in the past year.
Tencent's rally aligns with growing investor interest in Chinese tech stocks, fueled by President Xi Jinping's recent meeting with e-commerce icon Jack Ma. The show of support for the private sector has coincided with a surge in Hong Kong equities driven by AI advancements.
Analysts at Goldman Sachs predict that widespread AI adoption could boost Chinese EPS by 2.5% annually over the next decade. They emphasize the need for continued policy stimulus to address macro challenges and drive sustainable equity gains.
DeepSeek's R1 reasoning chatbot, released in January 2023, has had a significant impact on global stock markets, leading to a $1 trillion decline in US-listed companies heavily invested in AI hardware. Notably, it has driven a $1.3 trillion rally in China as investors anticipate further AI breakthroughs, although the rise has been uneven.