Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Tencent’s messaging app operates at a scale few global platforms can match. With 1.4bn users and a 93 per cent share among Chinese internet users, it has long been a part of daily life among locals. Yet scale alone is not a guarantee of continued dominance. With artificial intelligence quickly reshaping industries in China, Tencent is now making a calculated bet on its next big transformation.Tencent’s stock has risen 15 per cent in the past week, driven by the announcement that its social media and messaging app Weixin — the domestic version of its WeChat app, which serves international users — will integrate AI-powered search from DeepSeek, China’s answer to OpenAI. This is more than just a feature upgrade. It marks a significant shift in Tencent’s AI strategy: choosing an external partner over its own proprietary large language model.Tencent has good reason for its all-in bet on AI. The technology was already driving its growth. Tencent profits rose 47 per cent in the third quarter, beating expectations. Advertising revenue rose almost a fifth to $4.1bn, largely due to AI-powered video ads and recommendation algorithms. This self-reinforcing cycle, where AI drives engagement, engagement generates more data and data refines AI models, is quickly becoming an important edge.But Tencent’s ambitions go beyond search and ads. In China’s cloud sector, it lags behind local rival Alibaba, which has 36 per cent of the market, and Huawei Cloud, which has about a fifth. The Chinese cloud market is growing fast, with infrastructure service spending in mainland China exceeding $10bn and growing more than a tenth in the third quarter, according to Canalys, as companies race to include AI in their operations. Here, DeepSeek’s AI capabilities could serve as a key differentiator for Tencent’s cloud business, boosting its AI development tools and enterprise services as it builds out its market share.The recent rally in Tencent shares brings gains up to almost 80 per cent in the past 12 months. The stock trades at 19 times forward earnings, a premium to local tech rivals including Alibaba, reflecting hopes that AI-powered search and cloud integration will drive new growth.By integrating DeepSeek into its products instead of relying on its proprietary AI, Tencent is making a trade-off: flexibility over full in-house control. In China’s fast-changing, fiercely competitive AI landscape, where speed and scalability matter as much as innovation, this compromise may be a necessary [email protected]
