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October 3, 2017

Where is Tencent Investing Now?

Tencent has announced that it is set to ramp up its investment levels in AI, cloud services and online payments.

When it comes to these 3 areas, Reuters considers the Chinese social media & mobile gaming company to be falling behind when compared with other firms. President of Tencent, Martin Lau has said “We will be persistent but patient with our AI investment, because we believe it is a long-term initiative and we do not necessarily require our research to generate revenue directly in the short term”. It has also been noted that their information services, advertising platform and Fin tech will benefit in particular from AI.

What is AI?

Artificial Intelligence is intelligence exhibited by machines, rather than humans or other animals (natural intelligence, NI). In computer science, the field of AI research defines itself as the study of "intelligent agents": any device that perceives its environment and takes actions that maximize its chance of success at some goal. Colloquially, the term "artificial intelligence" is applied when a machine mimics "cognitive" functions that humans associate with other human minds, such as "learning" and "problem solving". 

Thanks to online payments, advertising and smartphone gaming, Tencent has announced it best ever results in the 2nd quarter of this year. Their profits surpassed the expectations of Wall Street and grew 70% on the previous year, making a gain of 18.23bn RMB. Total revenue also increased by 59% to 56.6bn RMB. 

In addition to this, WeChat’s monthly active user base grew to 963 million. Still, competition is ever-growing in the Chinese and international digital payments markets, and investment is necessary to grow Tencent’s payments and cloud businesses to their full potential.

Aside from in it’s only businesses, Tencent is also investing outside of the company.

In August, they contributed to Essential Products in a funding round that raised $300 million. Essential Products was founded by Andy Rubin, the investor of the Android mobile OS. The Wall Street Journal has it’s eye on the company, which it predicts to be a serious contender against Samsung & Apple in the smartphone market.

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