Tencent Holdings Ltd. and Alibaba Group Holding Ltd. are in discussions to join a maiden round of financing for Chinese AI pioneer DeepSeek, marking a milestone for the country’s artificial intelligence sector.

Tencent has proposed the acquisition of as much as a 20% stake in the startup as part of the funding round, though DeepSeek isn’t keen on ceding such a large portion of control, a person familiar with the matter said. While talks are proceeding and nothing’s been finalized, the benchmark for a valuation is publicly traded rivals like MiniMax Group Inc. of around $40 billion, the person said, asking to remain anonymous to discuss private negotiations. Alibaba is also involved in funding talks, though it’s unclear what the e-commerce leader is proposing, the person added.

Tencent and Alibaba are vying for leadership in Chinese AI with a coterie of startups including Moonshot and MiniMax. They’re also major suppliers of cloud services akin to Microsoft Corp. and Amazon.com Inc., and are keen to provide computing to up-and-coming startups that need data centers to operate their AI platforms. Both for instance are backers of MiniMax, the developer of the M2 large language model.

Talks remain in flux and there’s no guarantee of a deal, or the valuation at which it might proceed. The Information reported earlier that DeepSeek was looking to raise more than $300 million at a valuation of at least $20 billion. Representatives for the startup, Alibaba and Tencent didn’t respond to requests for comment. Their shares slid in Hong Kong Thursday. 

DeepSeek is owned by hedge fund Zhejiang High-Flyer Asset Management, whose cofounder Liang Wenfeng formed the startup in 2023. It released a breakthrough model in January 2025 that shook the AI world, achieving performance comparable to US rivals despite China’s limited access to international talent and cutting-edge semiconductor technology. 

It has continued with a rapid pace of new releases and differentiated itself from US companies including OpenAI and Anthropic PBC by pushing out low-cost, open source models.

Alibaba is already a major player in artificial intelligence, unveiling a new model this month that can create 3D environments and interactive videos. The company reorganized to bring its AI services and development into a single business unit last month. Tencent recently said it would double investments in AI to more than 36 billion yuan ($5.2 billion) this year.

DeepSeek is expanding into agentic AI in the wake of OpenClaw’s emergence, tapping a wave of enthusiasm for software that can carry out tasks without human intervention.

The Chinese startup posted more than a dozen job listings for agent-related roles, Bloomberg News reported in March. Like most startups, it’s also keen to gain access to the sort of computing power that data center builders Alibaba and Tencent can provide, to underpin an expansion into new fields.

--With assistance from Shona Ghosh, Olivia Solon and Luz Ding.

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Published on April 23, 2026