Tencent Fires Up AI Race With Model It Says Outdoes DeepSeek

(Bloomberg) -- Tencent Holdings Ltd. became the latest tech company to unveil or enhance an AI model intended to eclipse DeepSeek, joining a spate of rollouts since the startup’s emergence energized the US-China technology race.

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The Hunyuan Turbo S artificial intelligence model is designed to respond as instantly as possible, distinguishing itself from the deep reasoning approach of DeepSeek’s eponymous chatbot. The deployment cost has also fallen sharply, Tencent said on its official WeChat channel.

From OpenAI to Alibaba Group Holding Ltd., major industry players on both sides of the Pacific have in just the past month rolled out AI models at a rapid clip. The series of introductions underscore a dramatically quickened pace of development since DeepSeek stunned Silicon Valley with a model that matched the best from OpenAI and Meta Platforms Inc. That was true particularly in China, where the 20-month-old startup has galvanized interest across a tech industry that for years struggled to match the US.

“Every player will incorporate their techniques to improve their own architecture, and so we’ll keep having companies come up with new models that claim to be better,” said Xin-Yao Ng, an investment director at abrdn plc. “Tencent is likely to also invest heavily into AI infrastructure like Baba, and look to grow their AI cloud business.”

DeepSeek, founded by quantitative hedge fund manager Liang Wenfeng, has upended the global AI sector since it burst onto the scene in January.

What Bloomberg Intelligence Says

Though Tencent claims its latest AI model Hunyuan Turbo S is faster than DeepSeek R1, it appears unlikely to drive meaningful earnings upside. The model marks the company’s effort to catch up in the AI race — intensified by DeepSeek’s recent breakthrough — but we still expect Tencent’s AI ventures to remain unprofitable in the next three years.

- Robert Lea and Jasmine Lyu, analysts

Click here for the research.

Almost overnight, DeepSeek dismantled many of the assumptions inside Silicon Valley about the economics of building AI, as well as the best technical methods for developing the technology and the extent of the US lead over competitors in China. It sparked the biggest stock wipeout in Nvidia Corp.’s history last month, while creating hope for a renaissance for China’s leading internet companies.