Close- up of computer chip with AI sign by YAKOBCHUK V via Shutterstock
Chinese AI startup MiniMax is emerging as a formidable competitor to DeepSeek, having recently launched breakthrough products, including the M1 reasoning model, which uses less than half the computing power of DeepSeek-R1. The Shanghai-based company, valued at $2.5 billion in its March 2024 funding round, is preparing for a Hong Kong initial public offering (IPO) as early as this year.
MiniMax represents one of China’s “four new AI tigers” competing against Western giants, such as OpenAI. The company’s latest innovations include the Hailuo 02 video generator and MiniMax Agent, which indicate it is poised to gain traction in the generative AI space.
Investors can gain exposure to MiniMax through two major stakeholders: Alibaba (BABA) and Tencent (TCEHY), both of which are strategic investors in the startup. This provides retail investors with indirect access to one of China’s most promising AI companies, without requiring them to wait for the IPO.
However, industry experts warn that these so-called AI tigers face sustainability challenges, with most still burning cash while seeking viable profit models beyond free trials and limited enterprise customization.
Valued at a market capitalization of $593 billion, Tencent is one of the largest companies in China. In Q1, it reported revenue of $25.1 billion, a 13% year-over-year increase, while net income grew 22% to $8.5 billion. The technology giant’s gross profit exceeded $14 billion for the first time, demonstrating strong operational leverage across its diversified business portfolio.
Tencent’s strategic AI investments are already generating tangible returns across multiple segments. Marketing services revenue accelerated 20% year-over-year, benefiting from AI-powered advertising improvements that enhanced click-through rates from historical 1% levels to 3% in certain inventories.
Domestic Games achieved exceptional 24% growth, with flagship titles like Honor of Kings and Peacekeeper Elite reaching record quarterly revenues, supported by AI-enhanced user engagement and content optimization.
Tencent’s Weixin ecosystem, serving 1.4 billion monthly active users, is becoming the centerpiece of its AI strategy. The tech giant has integrated the Yuanbao AI assistant directly into Weixin chats, enabling context-aware responses and content discovery.
Weixin Search now incorporates large language model results, while AI-powered tools help content creators generate images and video effects, significantly reducing the time required for Mini Program development.
The gaming portfolio demonstrated remarkable strength, with Delta Force achieving 12 million peak daily active users and becoming the highest-ranked new mobile game released in China over the past three years. International games grew 23% year-over-year, driven by titles including PUBG Mobile and Brawl Stars.
Management emphasized that current AI investments represent a long-term value creation strategy, with CEO Pony Ma noting that while near-term costs may temporarily narrow operating leverage, these investments will generate “substantial incremental returns” over the longer term. Tencent increased capital expenditures by 91% year-over-year to $3.8 billion, primarily for investments in GPUs and servers to enhance its AI capabilities.
Out of the 16 analysts covering Tencent stock, 13 recommend “Strong Buy,” two recommend “Moderate Buy,” and one recommends “Hold.” The average target price for Tencent stock is $90, roughly 41% above the current price of $64.
www.barchart.com
In fiscal Q4 2025 (ended in March), Alibaba grew its sales by 7% year over year to $32.6 billion. A focus on operational efficiency allowed the e-commerce giant to increase adjusted EBITDA by 36% to $4.6 billion.
Alibaba’s AI and cloud computing initiatives are driving momentum. Alibaba Cloud achieved accelerated 18% revenue growth, powered by sustained triple-digit growth in AI-related products for the seventh consecutive quarter.
Management highlighted the expansion of AI adoption beyond large enterprises to small and medium-sized businesses, with new customers migrating from traditional offline infrastructure to cloud-based AI services across various sectors, including manufacturing, financial services, and even animal farming.
E-commerce operations showed strong user engagement, with Taobao and Tmall Group’s customer management revenue growing 12% year-over-year, driven by improved monetization through the Quanzhantui advertising platform and new software service fees. The platform’s premium 88VIP membership exceeded 50 million users, demonstrating growing customer loyalty and spending power.
International expansion accelerated through Alibaba International Digital Commerce (AIDC), which achieved 22% revenue growth driven by robust cross-border business performance. It remains on track to achieve quarterly profitability in its international e-commerce operations.
Alibaba strengthened its balance sheet by divesting non-core assets, generating $2.6 billion in cash proceeds. The company returned $16.5 billion to shareholders through $11.9 billion in share repurchases and $4.6 billion in dividends, including a 5% increase in annual dividends. With a strong $50.5 billion net cash position, Alibaba is well-positioned to capitalize on AI opportunities while maintaining its commitment to shareholder returns.
Out of the 20 analysts covering BABA stock, 19 recommend “Strong Buy” and one recommends “Moderate Buy.” The average target price for BABA stock is $162, 44% above the current price.
www.barchart.com
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
