Chinese tech giant Tencent has slowed the pace of its GPU rollout since implementing DeepSeek.
Chief Strategy Officer James Mitchell revealed the slowdown during the company’s Q4 2024 earnings call, when asked how capital expenditure on AI will impact margins and profits.
Mitchell replied that Tencent’s capital expenditure on GPUs mostly goes towards its advertising and games businesses, which both deliver strong returns.
Tencent also uses GPUs to train large language models, and Mitchell said there was a period of time last year when there was a belief that every new generation of large language model required in order of magnitude more GPUs,” he added.
“That period of time ended with the breakthroughs that DeepSeek demonstrated,” he said. “And now, the industry and we, within the industry, are getting much higher productivity on a large language model training from existing GPUs without needing to add additional GPUs at the pace previously expected.”
Tencent’s capex for FY 2024 reached CN¥76.8 billion ($10.6 billion), a sum more than triple its 2023 spending. Plenty of that went on servers and GPUs. President Martin Lau said since Q4 2024 the company “stepped up our purchase of GPUs” and believes they will “accelerate the revenue growth of our overall cloud services.”
Mitchell said 2025 capex will be a “low teens percentage of our revenue”.
The company’s FY 2024 revenue was CN¥660.3 billion ($91.1 billion) and grew eight percent year–over–year. Let’s therefore assume Tencent’s FY2025 revenue will be $100 billion and its capex $13 billion.
That guesstimate leaves Tencent spending vastly less than the [$80 billion](https://www.theregister.com/2025/01/06/ai_spending_spree_continues_as/) Microsoft plans to spend this year and the [$100 billion](https://www.theregister.com/2025/02/07/amazon_q4_fy_2024/) Amazon intends to shell out0.
Mitchell said Tencent is spending more than any other Chinese tech company, which he thinks all have lower capex than Western peers.
“That's because the Chinese companies are generally prioritizing efficiency and utilization – efficient utilization of the GPU servers,” he said. “And that doesn't necessarily impair the ultimate effectiveness of the technology that's being developed. And I think DeepSeek's success really sort of symbolizes and demonstrated that reality.”
Tencent posted a $31.6 billion profit for the year, up 40 percent year-on-year. Q4 revenue was $24 billion, an 11 percent jump, and profit was rose 29 percent to $7.9 billion.
Monthly active user numbers on the company’s flagship Weixin and WeChat social messaging services grew just three percent in FY 2024, but there are 1.385 billion of them and 262 million pay subscriptions for premium services. Tencent plans to add AI-powered search, language input, and content generation to Weixin and WeChat.
Company president Martin Lau said Tencent is already considering how to add agentic AI services to Weixin and WeChat – and how to have them interact with the “Mini Programs” that add functionality like e-commerce, food delivery, or streaming entertainment.
“If you look at the activities within Weixin it is actually very, very diversified,” he said. “There are a lot of transactions that go through Weixin. And there's a multitude of Mini Programs, which actually allowed all sorts of different activities to be carried out.”
“We can easily build an agent based on a model that actually can connect to a lot of the different Mini Programs and have activities and complex tasks completed for our users.”
More cloudy services for training AI models are on the way, as are inferencing-as-a-service offerings.
Chairman and CEO Pony Ma said Tencent’s results reflect its “shift toward high-quality revenue streams.”
Investors seem to have assumed this would happen, as Tencent’s share price popped a couple of percent but then settled to the same level at which it opened the week. The company’s shares are, however, up 42 percent in 2025 alone. ®