Tencent Holdings' TCEHY Yuanbao AI chatbot has surpassed DeepSeek as the most downloaded iPhone app in China.

What Happened: Tencent integrated its in-house Hunyuan AI technology with DeepSeek's R1 reasoning model, boosting the chatbot's appeal and helping it claim the No. 1 spot on China's iPhone app rankings this week, according to a report by Bloomberg.

DeepSeek had dominated downloads for over a month. Three of the top five free apps in China are now AI-powered chatbots, with ByteDance's Doubao also ranking among them.

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In January, DeepSeek shook the U.S. stock market. Nvidia Corp. NVDA lost $600 billion in value in a single day.

According to the Chinese startup, its chatbot can compete with OpenAI’s ChatGPT, which it developed at a fraction of the cost.

In response to DeepSeek's rise, Alibaba Group Holding Ltd. BABA has begun benchmarking against it and announced a $53 billion AI investment.

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Why It’s Important: China's leading tech giants—Tencent, Alibaba, and Baidu Inc. BIDU—are in a fierce race to capture the growing AI market. 

While monetization strategies remain unclear, companies are focused on mass adoption and open-source AI development.

With its 1.4 billion WeChat users, Tencent has an advantage in distributing AI-powered services, but Alibaba and Baidu are making larger AI investments. 

Meanwhile, Nvidia CEO Jensen Huang has spoken about the need for significantly more computational power for next-generation AI models.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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