Tencent Takes Cautious Approach to AI as Revenue Snaps Two-Quarter Decline

BEIJING, March 23 (TMTPOST)— Tencent Holdings Ltd., takes a cautious approach to its development of artificial intelligence (AI) following a quarter returned growth after a year’s cost reduction.

Source: Visual China

Our strategy is to work hard to do a good AI job instead of working in a rushed way. We want to make sure the base model is properly built on a solid foundation, Tencent management answered question about how to handle opportunities and challenges brought by ChatGPT, OpenAI’s wildly popular generative AI chatbot, at an earnings call on Wednesday.

From these executives’ point of view, the first version of Tencent’s AI offering is actually one of iterations followed by many others, and there is a long process involving a large number of iterations. They believe the emerging of ChatGPT suggests a potential of growth for Tencent, because the company’s main businesses–social media, communications and gaming are all about user-to-user service, which can be improved by generative AI and the underlying technology. Tencent is definitely to commit a lot of resources and build out its foundation model to integrate it into each business of the company, according to the executives. They said that the chatbot is one of many applications that Tencent will launch in the future, so what ChatGPT brought is a new business opportunity that Tencent can effectively develop over time rather than a business threat that the Chinese tech giant has to deal with immediately.

Tencent posted a stronger-than-expected net income earlier that day. The profit attributable to equity holders for the quarter ended December31, 2021 increased 12% year-over-year (YoY) to RMB106.27 billion (USD15.3 billion), beating an expectation of RMB28.99 billion. The profit surge was driven by one-time gain of more than RMB85 billion from offloading about 948 million shares of Meituan. Revenue that quarter edged 1% higher from a year ago to RMB144.95 billion, snapping two consecutive quarters of decline. That is roughly in line with the analysts’ estimates. Total revenue in the year 2022 down 1% YoY to RMB554.55 billion, the first annual negative growth for the Shenzhen-based company founded in 1998. It was still better than the analysts’ forecast of RMB554.2 billion.

“During 2022, we increased our business efficiency, sharpened our focus on core activities, and developed new services and revenue lines including Video Accounts and international games. These changes position us to benefit from, and contribute to, a rebound in China economic growth which our users’ activity suggests is now underway,” Ma Huateng, chairman and CEO, commented. Ma said the investment in AI capabilities and cloud infrastructure to embrace foundation models will enhance experience of existing offerings, and allow his company to explore introducing new products.

Tencent was reported in late February to have launched an AI-powered conversational project dubbed HunyuanAide, and appointed its Chief Scientist Zhengyou Zhang as owner the project, which  has at least seven team leaders and seven sponsors, almost all the officials involved are key figures at the behemoth.  Tencent has long been working at the AI related offerings and has promoted its special research in an orderly manner, the WeChat owner responded later. It vowed to have further development and exploration on the cutting-edge technologies based on previous expertise on AI large models, machine learning algorithms and Natural language processing (NLP).

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