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Tencent Says AI Chip Stockpiles Shield It from U.S. Curbs as Q1 Revenue Beats Forecasts

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Tencent Holdings reported a strong 13% year-on-year revenue increase in the first quarter of 2024, reaching 180 billion yuan ($24.97 billion) and beating analysts’ expectations. The gains were largely fueled by growth in domestic and international gaming, AI-powered advertising, and financial technology services.

Despite ongoing U.S. restrictions on advanced chip exports, Tencent President Martin Lau downplayed the impact, stating that the company had previously stockpiled AI chips, enabling it to maintain momentum in its artificial intelligence development plans.

“The good thing is that we have a strong stockpile of chips… useful for executing our AI strategy,” Lau said during the earnings call.

While Nvidia’s H20 chip and other high-end processors have been barred from sale to Chinese firms under U.S. export restrictions, Tencent noted that alternative chips are available domestically, and its software advancements would help optimize chip usage.

Key Financial Highlights (Q1 2024):

  • Revenue: 180 billion yuan (vs. 174.6B expected, LSEG)

  • Net profit: 47.8 billion yuan (below 52.2B analyst estimate)

  • Domestic gaming revenue: Up 24% to 42.9B yuan

  • International gaming revenue: Up 23% to 16.6B yuan

  • Marketing services revenue: Up 22% to 17.7B yuan

  • FinTech & Business Services revenue: Up 16% to 27.6B yuan

AI and Strategic Investments

Tencent reaffirmed its commitment to AI development, planning to allocate a low double-digit percentage of 2025 revenue to capital expenditure, primarily targeting AI infrastructure. The company continues to evolve its proprietary large language model Hunyuan, and recently released a public-facing version named T1.

Tencent has also emerged as a collaborative leader among Chinese tech giants, integrating AI models from DeepSeek, an emerging firm known for developing competitive, cost-efficient alternatives to Western AI systems.

Broader Implications

The company’s performance illustrates Tencent’s resilience in the face of geopolitical tech tensions, while demonstrating the commercial viability of China’s AI ecosystem—even under hardware constraints. Its diverse revenue base, spanning gaming, advertising, and financial services, is increasingly supported by AI innovation, keeping Tencent at the forefront of China’s digital economy.

Bain Capital Plans $4 Billion+ Sale of China Data Centre Arm WinTriX

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Bain Capital is preparing to sell the China business of data centre operator WinTriX DC Group, in a deal that could value the division at over $4 billion, according to two sources with direct knowledge of the matter. The move comes amid soaring valuations in the global data centre market, fueled by surging demand for artificial intelligence infrastructure.

The potential sale would mark a major strategic reshuffle for Bain Capital, which acquired Chindata Group in 2019, later merged it with Southeast Asia’s Bridge Data Centres, and then rebranded and separated the businesses under the WinTriX name after taking Chindata private in a $3.16 billion deal in 2022.

Key Financials and Deal Context:

  • WinTriX’s China unit is projected to generate close to 4 billion yuan ($554 million) in EBITDA in 2025.

  • The sale process is in early stages, with advisors having held preliminary talks with potential buyers.

  • Bytedance, the parent company of TikTok, was WinTriX’s largest customer in 2022, accounting for 86% of its revenue, according to Fitch Ratings.

Market Backdrop:
The sale comes as data centre valuations surge globally, bolstered by AI-driven growth. In 2023, Australia’s AirTrunk was sold to a Blackstone-led consortium at over 20 times forward earnings, illustrating investor appetite in the sector. By comparison, GDS Holdings, a major China-based rival, is currently trading at a P/E multiple of 8.48, per LSEG data.

Fitch Downgrade Adds Complexity:
Despite growth opportunities, Fitch Ratings downgraded WinTriX in February from “BBB” to “BB”, citing increased risks tied to its strategic pivot toward overseas expansion, slower demand for hyperscale centres in China, and rising local competition.

Bridge Data Centres to Remain Under Bain:
Sources said Bain will retain control of Bridge Data Centres, which operates outside China and in March secured a $2.8 billion bank loan to support expansion in markets like India and Malaysia.

Neither Bain Capital nor WinTriX responded to Reuters’ requests for comment.

As AI infrastructure continues to drive global investment in cloud and compute capabilities, the potential WinTriX China sale could be a timely cash-out for Bain Capital, while also offering a major player a foothold in China’s data infrastructure market — albeit one still closely tied to a dominant but concentrated revenue base.

Zhipu AI Launches Free AI Agent, Heats Up China’s Tech Race

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Chinese AI startup Zhipu AI has unveiled a free-to-use AI agent named AutoGLM Rumination, further intensifying the fast-growing artificial intelligence competition within China’s tech industry. The announcement was made by CEO Zhang Peng during a launch event in Beijing on Monday.

AutoGLM Rumination is capable of executing complex tasks such as deep research, web browsing, travel planning, and writing research reports. It is powered by Zhipu’s proprietary models — the reasoning model GLM-Z1-Air and the foundation model GLM-4-Air-0414. According to the company, GLM-Z1-Air rivals DeepSeek’s R1 in output quality but operates up to eight times faster, while demanding significantly less computing power — just one-thirtieth of the resources.

AI agents like AutoGLM are designed to autonomously perform tasks and make decisions, and their popularity is rapidly rising as firms strive to commercialize AI tools in practical, real-world settings. The move by Zhipu comes on the heels of Manus launching what it claimed was the world’s first general AI agent — albeit at a premium price of up to $199 per month. In contrast, Zhipu is offering its agent completely free via its official website and mobile app.

Founded in 2019 as a spinoff from a Tsinghua University laboratory, Zhipu AI has rapidly gained momentum and recognition. Its GLM series of large language models, particularly GLM4, are reported by the company to outperform OpenAI’s GPT-4 on several benchmarks.

This latest product launch is buoyed by a wave of government-backed support, with the company securing three rounds of funding in one month. The most recent came from the city of Chengdu, which invested 300 million yuan ($41.5 million) into Zhipu.

As the AI ecosystem in China accelerates, Zhipu’s free access model could prove disruptive — democratizing access to advanced AI tools while pushing other domestic rivals and global players to adjust their pricing and strategies.