Tencent Holdings Ltd. has joined the intense global race to develop cutting-edge artificial intelligence (AI) models, unveiling its Hunyuan Turbo S, which it claims surpasses DeepSeek’s renowned R1 model. The move comes amid a surge of AI model rollouts from both U.S. and Chinese tech giants, further intensifying competition in the AI sector.
The Hunyuan Turbo S model is designed to deliver lightning-fast responses, positioning itself as an alternative to DeepSeek’s more complex reasoning approach with its chatbot. According to Tencent, the deployment costs for its new model have significantly decreased, making it more accessible to developers and enterprise users via Tencent’s cloud services.
Since DeepSeek’s launch, the tech world has witnessed a rapid pace of AI development, with companies such as OpenAI, Alibaba Group, and Tencent racing to enhance their models. DeepSeek, the 20-month-old startup founded by hedge fund manager Liang Wenfeng, has emerged as a major disruptor, especially in China, where its model has sparked massive interest and posed a challenge to the U.S. tech giants’ dominance.
Xin-Yao Ng, an investment director at abrdn plc, noted that the ongoing competition in AI will likely lead to continuous innovation, with companies constantly improving their models. “Tencent is likely to invest heavily in AI infrastructure and expand its AI cloud business, following the footsteps of Alibaba,” he said.
Despite Tencent’s claims that the Hunyuan Turbo S is faster than DeepSeek’s R1, Bloomberg Intelligence analysts Robert Lea and Jasmine Lyu have pointed out that the model may not drive significant earnings growth for Tencent in the short term. They predict that Tencent’s AI ventures will remain unprofitable for the next few years, despite the company’s efforts to catch up in the AI race.
DeepSeek’s rapid rise has disrupted many assumptions in Silicon Valley, challenging ideas about AI economics and the technical approaches needed for its development. The startup has shaken up the global AI market, even contributing to the biggest stock wipeout in Nvidia Corp.’s history last month. Its success has sparked optimism for a resurgence in China’s tech sector, particularly for internet giants like Tencent and Alibaba.
Tencent’s Turbo S model is now being made available for developers and select enterprise users. It will also be tested within Tencent’s consumer-facing chatbot, Yuanbao, which has lagged behind competitors in terms of usage. This release follows closely behind Alibaba’s Qwen AI model, which was benchmarked against DeepSeek’s models last month. Other competitors like Baidu Inc. and ByteDance Ltd. are also rolling out similar AI models to challenge DeepSeek’s dominance.
DeepSeek’s success has been so significant that it has gained widespread support from corporate and government entities across China, including an endorsement from President Xi Jinping, who invited Liang to join an elite forum of tech leaders. The company has even struggled to meet demand, briefly halting some services due to server limitations. To cope with this demand, DeepSeek has slashed pricing for API access during off-peak hours.
In a bold move, DeepSeek also pledged to release key code and data to the public, setting itself apart from rivals like OpenAI, who have been more cautious with sharing their core technologies. This open-source approach could further accelerate the adoption of DeepSeek’s technology and solidify its place as a dominant force in the AI sector.
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