Chinese technology giants Tencent and Alibaba Group are reportedly in discussions to participate in a new funding round for AI startup DeepSeek, marking a significant development in China’s fast-growing artificial intelligence sector.

According to sources familiar with the matter, Tencent has proposed acquiring as much as a 20 percent stake in the company as part of the financing round, News.Az reports, citing Bloomberg.

However, DeepSeek is said to be reluctant to give up such a large level of control. While negotiations are ongoing, no agreement has been finalized.

The valuation under discussion is reportedly being benchmarked against listed AI competitors such as MiniMax, with estimates around $40 billion. Alibaba is also participating in the talks, though the specifics of its proposed investment remain unclear. Both companies declined to comment.

Tencent and Alibaba are competing for leadership in China’s AI industry alongside other startups such as Moonshot AI and MiniMax. Both firms also operate large cloud computing businesses, similar to U.S. tech giants like Microsoft and Amazon, and are positioning themselves as key providers of computing infrastructure for emerging AI companies.

DeepSeek, which is owned by hedge fund Zhejiang High-Flyer Asset Management, was founded in 2023 by co-founder Liang Wenfeng. The startup gained global attention after releasing a breakthrough AI model in January 2025 that rivaled leading U.S. systems despite China’s limited access to advanced semiconductors and international talent.

Since then, DeepSeek has continued to release new models at a rapid pace and has differentiated itself by focusing on low-cost, open-source AI systems in contrast to U.S. competitors such as OpenAI and Anthropic.

Alibaba has also expanded aggressively in the AI sector, unveiling a model capable of generating 3D environments and interactive video, while reorganizing its AI operations into a dedicated business unit. Tencent has announced plans to significantly increase its AI investments, raising spending to more than 36 billion yuan ($5.2 billion) this year.

DeepSeek is also moving into “agentic AI,” developing systems capable of performing tasks autonomously. The company has posted multiple job listings for roles related to this technology as it seeks to expand further.

Both Tencent and Alibaba are also expected to provide cloud computing resources, which are critical for supporting the training and operation of advanced AI systems.

News.Az 

By Nijat Babayev