Tencent gains momentum in Chinese agent AI race with Alibaba

In China’s highly competitive artificial intelligence (AI) field, Alibaba Group has outpaced Tencent with its incredible speed of deployment and user growth. But the latter companies are now taking the lead as agent AI fever grips the nation.

In just one week, Tencent has announced several flagship products aimed at capitalizing on the public’s enthusiasm for AI agents, including OpenClaw, an automation service that performs real-world tasks. These highlight the first benefits for WeChat operators. It’s grouping the entire Chinese app world into a single platform with 1.4 billion users.

The company is currently working on integrating its own AI agent into WeChat to automate tasks such as ride hailing and restaurant reservations, the people said. The service could launch as early as next month, depending on computing constraints, said the people, who asked not to be identified discussing personal details.

This poses a challenge for Alibaba, which is China’s leading large-scale language model maker in open source, but has so far struggled to translate it into a significant commercial lead. Just this month, Alibaba lost a star model developer, raising questions about the company’s broader approach to AI. The company this week announced a major corporate restructuring to refocus on profiting from technology.

Investors are starting to bet on the outcome of that race. Tencent has lagged behind Alibaba in stock market gains since 2025, but has risen 6% since launching its agent-based AI services Qclaw and Workbuddy, setting its best monthly performance against Alibaba in the past two years.

“This is the year that AI agents become a very important form factor globally,” said Kevin Hsu, technology investor and founder of Interconnected Capital. “Now is the time for Tencent’s great products to shine.”

China’s two biggest tech companies will announce their financial results in quick succession starting Wednesday. Investors have criticized Tencent for lagging behind Alibaba in China’s AI race, but Tencent’s foray into agent AI is changing the narrative. Since the release of QClaw and WorkBuddy targeted at professional users, Tencent has gained a market value of nearly USD 35 billion.

Tencent is well-positioned to build agent AI due to its large amounts of user data and unparalleled access to the vast WeChat ecosystem. These services work best when they have access to your information and a wealth of apps.

In a sign of Tencent’s new focus, founder Pony Ma, who is usually averse to publicity, used his WeChat feed to promote QClaw and Workbuddy, according to local media reports.

“Tencent’s strength lies in WeChat’s entrenched role in communication, discovery, payments and fulfillment,” JPMorgan Chase analysts including Alex Yao said in a note last week. This is a high bar for rivals, he added.

Tencent currently boasts 64 buy recommendations, making it the most popular stock in Asia, according to Bloomberg data. Alibaba owns approximately 48 shares. With P/E ratios of 15 to 16 times, both companies trade at a discount to their U.S. peers such as Nvidia and Amazon.com, which have price-to-earnings ratios of more than 20 times.

In terms of raw performance, Alibaba’s Qwen family of models rivals products from Anthropic PBC and OpenAI on benchmark leaderboards, sparking a wave of adoption in the open source community. These models also power its eponymous consumer app, evolving it from a chatbot to an all-in-one platform that connects with Alibaba’s online shopping universe. The company is also experimenting with hardware such as Qwen glasses.

But the sudden departure this month of Lin Junyang, the top developer of the Qwen model and one of the most influential people behind Alibaba’s AI transition, has raised questions about the company’s approach to cutting-edge research. The exact reason for his departure remains unclear.

At the same time, sources familiar with the matter said tensions between Lin’s tightly controlled research team and Alibaba Cloud had been brewing even before Lin’s sudden resignation, with complaints about a lack of communication among team members.

Some within Alibaba view the latest Qwen 3.5 offering as underwhelming, the source added. In recent months, Alibaba reportedly hired Zhou Hao from Google DeepMind to work on the Qwen model. It is unclear whether Mr. Chou and Mr. Lin will have overlapping responsibilities.

Tencent has avoided matching Alibaba’s AI spending targets, and its main consumer app, Yuanbao, remains a siled effort. Former OpenAI researcher Yao Shunyu, who was appointed Tencent’s chief AI scientist in December, is now tasked with evolving the company’s Hungyuan model and closing the gap with Chinese peers such as Qwen and ByteDance’s Seed.

The frenetic pace of China’s AI race was on full display during last month’s week-long Lunar New Year holiday. Morgan Stanley estimates that Alibaba, ByteDance, Tencent and Baidu have spent a total of 8 billion yuan (S$1.5 billion) promoting AI apps through cash gifts, subsidies and media acquisitions.

While all platforms achieved significant short-term user growth over the holiday period, Yuanbao recorded the steepest decline, with daily active user numbers retreating to near pre-campaign levels. Analysts note that Qwen usage has significantly exceeded pre-campaign levels thanks to the longer voucher validity period.

In the long term, Tencent wants to more closely integrate AI with WeChat, known as Weixin in China, the social media, entertainment and gaming platform that underpins its entire business. Executives said they aim to evolve WeChat into a full-fledged agent service, or digital assistant. The Information previously reported on Tencent’s plans to integrate agent AI with WeChat.

“It’s a bolt out of the blue that eventually Weixin, equipped with AI agents, will be able to assist users with many tasks,” President Martin Lau told analysts in November. “Right now, this is in a very early stage of development.”Bloomberg