Alibaba bets on AI’s future. Tencent is cashing in now
China’s two tech giants have a lot in common, but not when it comes to AI and investor relations
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Earnings season isn’t for everyone, but today throws up the chance to analyse two of China’s largest tech companies and their approach to AI after Alibaba and Tencent both turned in their latest financials.
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Alibaba has a long-term vision for AI but Tencent looks like its lagging
Today’s lesson is about presenting information, and in doing so we can see the massive contrast between how Alibaba and Tencent are embracing AI.
At first glance, both companies are developing strong LLMs with global pull, Tencent rebuilt its from the ground up, and they’re investing in the most promising startups out there, including, apparently, DeepSeek. But these earnings also revealed their fundamentally different approaches.
Alibaba goes long
Alibaba’s earnings initially spooked investors, and its share price dropped as much as 4% after it posted an operating loss and significantly reduced EBITDA (down 84% year-on-year) due to heavy spending on AI, cloud infrastructure and the cost of its quick commerce battle with Meituan.
The company posted an overall net profit, thanks to the breadth of its business, but the large focus on AI spending appeared to be a concern. That was until Alibaba’s management team clarified its strategy on their earnings call. Then the market changed.
The stock price rallied and was up 7.5% on the day as CEO Eddie Wu explained that ROI on the AI spending is “extremely clear” in the next 3-5 year period.
It’s certainly notable that Alibaba has flipped a switch in recent months. Its approach to AI has gone from incubating, developing and growing to now deploying and monetising. In March, a number of prominent members of its Qwen AI division left, including technical lead Junyang Lin. Wu himself is part of a new business unit formed in March that combines teams from the Qwen model research team, consumer apps, DingTalk and Quark devices.
The goal is pretty clear, getting those smarts into products and services. This week, Alibaba integrated Qwen with its Tmall and Taobao e-commerce service to give consumers AI and agentic commerce for the first time. It has also begun working with third parties including China Eastern Airlines.
Outside of its own needs, Alibaba Cloud saw annual growth increase to 38%. AI revenue accounted for less than one-quarter of the Cloud unit’s $6 billion revenue for the quarter, but Wu forecast it will grow by more than 3X to reach 30 billion CNY ($4.4 billion) by the end of the year. On the downside, he expects AI spending to be higher than first forecast.
Tencent makes it easy for investors
In Tencent’s case, less clarification was required since its results were clear on the role of AI, which is mostly for internal processes and consumers.
Pony Ma mentioned the term ‘AI’ no fewer than eight times in his statement that accompanied the earnings press release, which I added below. That’s not bad for just four sentences. For comparison, Alibaba’s Wu managed just five mentions. ‘AI’ even appeared twice in the Tencent press release headline.
Tencent didn’t miss a chance to seize the AI narrative, and it did so in a way investors can follow. That included breaking out its profit figures excluding new AI products and a number of other disclosures.
It showed controlled spending.
Our core businesses continued to grow their engagement, revenue and profit, providing the cash flow to fund our AI investments, as well as use cases for future AI deployment,” Ma said in that AI-laden statement I referenced earlier. (Emphasis mine.)
It presented category leadership by claiming WorkBuddy, one of its numerous OpenClaw agents, is China’s most popular productivity AI agent based on daily users.
And, crucially, it showed bottom line growth today:
“Revenues from Marketing Services were RMB 38.2 billion [$5.6 billion] for 1Q2026, up 20% YoY, improving from 17% YoY growth in 4Q2025. We upgraded our AI-driven ad recommendation model and expanded closed-loop marketing capabilities within the Weixin ecosystem, which improved ad performance and pricing”
Tencent’s share price initially rose but it closed the US workday flat. Make of that what you will.
In other interesting news you won’t want to miss:
Junyang Lin, the aforementioned former lead researcher of Qwen, is reportedly looking to raise several hundred million dollars for a new AI lab that could be valued at $2 billion post-funding. Gaorong Ventures and HongShan are in talks to invest. [The Information]
Former Peak XV Partners managing directors Ashish Agrawal, Ishaan Mittal and Tejeshwi Sharma are said to be launching Mettle Capital, a VC firm targeting a first raise of $350 million-$400 million. [The Economic Times]
Nadiem Makarim faces a jail sentence of up to 18 years as his trial moves closer to a conclusion. [Reuters]
US investor and former Coinbase CTO Balaji Srinivasan is seeking closer ties with Malaysian politicians for Network School, his unconventional educational community that is based in Forest City [Bloomberg]
SoftBank is posting profits, but it’s mostly down to paper wins from its OpenAI investment [Bloomberg]
Not a huge surprise but still notable that India is the largest market for Meta AI, the chatbot that lives inside WhatsApp—India is, of course, the largest market for WhatsApp worldwide [The Economic Times]