Chinese internet giant Tencent is taking a “persistent but patient” approach to AI, adding it doesn’t expect AI to contribute to the company’s bottom line in the short term.
Not that the company currently needs much help driving financial growth.
Tencent enjoyed a 70 per cent surge in quarterly profit in Q2, beating analyst expectations. It posted a $2.72 billion profit for the three months ended June 30, on revenue of $8.4 billion, which increased 57 per cent from the same period a year earlier.
Revenue growth was driven by Tencent’s suite of digital businesses, including smartphone games and PC games, payment services, online advertising, and digital content subscriptions.
For the half ended June 30 revenue was up 57 per cent to $15.7 billion and profit was $4.8 billion, an increase of 63 per cent year on year.
Tencent President Martin Lau outlined the company’s AI ambitions during an earnings call.
“We have been investing heavily in AI but relatively quietly, as we view AI as an essential capability that enhances user experience and empowers us to capture the new exciting opportunities to grow our businesses for the future,” he 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 a research to generate revenue directly in the short-term.”
Tencent believes AI will add significant benefits to every area of its existing businesses and services.
“These areas may not generate revenue immediately but we think they’re important and beneficial for advancing our AI know-how which will benefit us in the long-run,” Lau said.
During the quarter, online games revenue increased by 39 per cent primarily driven by Tencent’s smartphone games, including Honour of Kings.
Online advertising revenues increased by 55 per cent and revenue from social networks increased by 51 per cent year-over-year.
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Tencent said its payment and cloud business grew by triple digits. These fall into Tencent’s ‘Other’ category which increased revenue by 177 per cent.
President of Tencent Martin Lau said the goal of payments business — WeChat Pay — isn’t to make a profit. “We want to reinvest the revenue and potential profit that we can make from this business into growing the coverage and the usage of the service,” he said.