Tencent, DeepSeek, and Stock Reaction
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In recent months, the race for supremacy in artificial intelligence (AI) has intensified among major technology companies, with Tencent firmly positioning itself at the forefrontOn February 18, 2023, Tencent announced a strategic move to integrate its DeepSeek AI model into its popular WeChat search platform, enabling a broader user base to take advantage of the advancements in AI-powered search functionalitiesThis integration marks a significant step in Tencent’s ongoing efforts to enhance user experience and accessibility within its ecosystem.
Previously, WeChat had been conducting a gray-testing phase for the DeepSeek-R1 model, which offered a robust search experience to a limited number of usersThese users, benefiting from its capabilities, could access a premium, full-version AI model for freeHowever, as quickly as excitement grew around its features, so did the realization of limited resourcesWeChat’s announcement indicated that the enthusiasm for the AI model had significantly surpassed their expectations, creating a wave of demand for which they were initially unpreparedTo alleviate this burden, Tencent quickly coordinated an internal deployment, allowing more WeChat users to see a prompt to download the Yuanbao application and experience the new features.
As AI technology evolves, platforms like WeChat are not merely facilitating communications; they are revolutionizing how users search for and consume informationFor instance, a journalist experimenting with the DeepSeek-R1 on the evening of February 18 noted that after inputting a question, the system meticulously revealed its thought process in respondingThis interaction, though punctuated by brief pauses, culminated in a comprehensive answer delivered within three minutes, showcasing the model's capability to engage in detailed and logical reasoning.
Interestingly, the Yuanbao app, which aims to harness the capabilities of DeepSeek, had been online since May 2022 without fully capitalizing on Tencent’s overarching ecological advantages at launch
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However, with the recent integration of DeepSeek-R1, Yuanbao seems poised for a potential surge in user adoptionThe app allows choices between distinct models tailored for various tasks—one for general tasks and another, DeepSeek, specifically for complex reasoning and deep thought processes.
During the company's annual conference in January, Tencent's Chairman and CEO Ma Huateng urged various business groups within Tencent to embrace the productization of large models, envisioning the rollout of AI agents in popular platforms such as WeChat, QQ, and browsersThe gaming and reading platforms under Tencent are also expected to integrate enhanced AI capabilities based on the Hongyuan modelA recent UBS report indicated that the gradual adoption of DeepSeek across Tencent’s products could lead to accelerated traffic growth, further bolstering AI agent evolution on WeChat.
As various products integrate the DeepSeek model, Tencent's stock experienced a notable uptick, climbing by 3.96% on February 17 and an additional 2.01% the following day, surpassing the HKD 500 per share markHowever, industry experts have issued warnings regarding the implications of the open-source nature of DeepSeek-R1 on proprietary model providers, suggesting that it may present substantial competitive challenges for other players in the large model arena.
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