Tencent Stock Jumps 5% After Launching New AI Image Model

TLDR

• Tencent stock rose as much as 7.8% on Tuesday before settling around 5% higher in afternoon trading
• The company launched Hy-Image-3.5-Preview, supporting text-to-image, image-to-image generation and multi-turn editing at up to 4K resolution
• The new model scored 30% higher than its predecessor and benchmarks ahead of Alibaba’s Qwen-Image-3.0 Pro and Google’s Nano Banana Pro
• Tencent recently hired former OpenAI researcher Yao Shunyu as its chief AI scientist
• Rival Alibaba held its Apsara Conference the same day, announcing plans to train a model with up to 10 trillion parameters

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Tencent stock climbed sharply on Tuesday after the company unveiled the latest version of its AI image generation model, putting it on track for its best day since early June.

Tencent Holdings Limited, TCTZF

Hong Kong-listed Tencent (HK:0700) rose as much as 7.8% before trimming gains to around 5.5%, trading at HK$458.4. The stock had already gained 2.6% on Monday.

The catalyst was the launch of Hy-Image-3.5-Preview, a new model that supports text-to-image and image-to-image generation, along with multi-turn conversational editing. It generates images at resolutions of up to 4K and accepts multimodal inputs.

Tencent said the new model scored 30% higher than its predecessor in internal testing. The company ran blind tests involving hundreds of in-house professional designers.

The model’s performance is comparable to ByteDance’s Seedream 5.0 Pro and slightly ahead of both Google’s Nano Banana Pro and Alibaba’s Qwen-Image-3.0 Pro.

Stepping Up AI Investment

The launch is part of a broader push by Tencent to accelerate its AI capabilities. The company has been expanding its Hunyuan model family across its ecosystem, including its Yuanbao AI assistant and other products.

Tencent recently hired former OpenAI researcher Yao Shunyu as chief AI scientist. Its AI desktop agent, WorkBuddy, has become China’s most widely used office agent, capable of independently executing workplace workflows.

Analysts at Daiwa noted that Tencent continues to have several AI monetization pathways despite higher capital expenditure. AI is already improving user engagement, operating efficiency and monetization in its core gaming and advertising businesses.

Alibaba Makes Its Own Move

Tuesday was a busy day for Chinese tech AI news. Alibaba held its annual Apsara Conference on the same day, where it outlined an aggressive AI strategy of its own.

Alibaba said it plans to train a new model with between 5 trillion and 10 trillion parameters, potentially two to four times the size of its current flagship Qwen 3.8 Max. The company also unveiled a new AI chip as part of a push to build a full-stack ecosystem covering chips, data centres, models and AI agents.

Alibaba’s Hong Kong-listed stock rose 1.95% on Tuesday.

The broader Hong Kong tech market also moved higher. The Hang Seng Index gained 0.3% while the Hang Seng Tech Index added 0.5%.

Tencent’s WorkBuddy AI agent and increasing subscriptions to its AI productivity tools point to early signs of monetization in a competitive market.

Tencent’s stock had already gained 2.6% on Monday ahead of the model launch, meaning Tuesday’s move extended a two-day run for the stock.