The Best Way to Bet on China’s AI Boom Might Just Be in South Africa

If someone told you the best way to invest in China’s booming AI ecosystem was through a 100-year-old South African media company, you’d probably do a double take. But here’s the thing that may actually be true, and it all comes down to Tencent and a few brilliantly timed decisions made more than two decades ago.

Let’s unpack this opportunity.

Key Points

• Tencent is a top AI contender in China, developing its own LLM and backed by massive infrastructure.

• Naspers gives discounted exposure to Tencent, trading well below the value of its stake through Prosus.

• Prosus is now self-funding, with a new CEO driving profitability and potential for a valuation rebound.

China’s AI Surge Isn’t Just Talk, It’s Real

There’s no denying that artificial intelligence is reshaping the global economy. And while most headlines focus on the U.S., OpenAI, Nvidia, Anthropic, China has built one of the most formidable AI ecosystems on the planet.

Even Nvidia’s CEO Jensen Huang recently emphasized that half the world’s AI researchers are in China. That’s no accident.

Despite U.S. chip restrictions, China continues to make strides, the release of DeepSeek-V2 and, more recently, DeepSeek R1, stunned industry watchers with its capabilities.

DeepSeek is trained on Chinese-language data, yes, but also boasts strong English performance, hinting at ambitions far beyond national borders.

If AI is going to reshape the world, you want exposure, and that includes Chinese exposure. But owning Chinese tech stocks directly? That’s where things get tricky.

The Problem With Betting Directly on China

Buying Chinese stocks as a U.S. or European investor isn’t straightforward. Between government oversight, unpredictable regulatory crackdowns, and structural risks tied to variable interest entity arrangements, investing in mainland tech names like Tencent or Alibaba comes with baggage.

And yet, Tencent remains one of the most compelling AI bets out of China. It’s massive, diversified, and deeply entrenched in China’s digital life. Think about this. WeChat alone, Tencent’s messaging, social media, and payments super app, has over 1.4 billion users.

Add to that its leadership in cloud computing, video games, streaming platforms, and digital payments, and you’re looking at an empire.

But here’s where it gets interesting. Tencent is building its own LLM, Hunyuan, to compete directly with China’s top AI labs.

If Hunyuan outperforms rivals like DeepSeek over time, Tencent’s reach and infrastructure could give it a dominant AI position within China, and possibly beyond.

So, how can investors tap into Tencent’s upside without owning its stock directly?

A Sub $1 Bet

Enter Naspers (NPSNY), the South African holding company that stumbled into one of the greatest venture investments of all time.

Back in 2001, Naspers paid just $32 million for a nearly one-third stake in a scrappy Chinese startup named Tencent. That investment is now worth well over $100 billion.

Let that sink in.

But here’s what’s incredible because instead of cashing out completely, Naspers has retained a large stake via Prosus (PROSY), a Dutch-listed subsidiary it spun out in 2019 to access larger capital markets. Prosus still owns roughly 23% of Tencent.

In plain English, Buy Naspers, and you get Tencent, but at a deep discount.

A Discount on a Discount

Here’s where things get really quirky. Despite owning tens of billions in Tencent stock, Prosus trades at a 30% discount to its net asset value, and a roughly 9% discount to the value of its Tencent stake alone.

That means investors are basically getting all of Prosus’ other assets, including holdings in food delivery, fintech, classifieds, and ed-tech, for free.

Naspers, in turn, trades at an even wider discount of over a third to its stake in Prosus.

In other words, you’re getting a discounted slice of a discounted slice of Tencent.

Aren’t Holding Companies Value Traps?

Holding companies often trade at discounts for years, especially if they’re seen as bloated or mismanaged. For years, that was part of the knock on Prosus and Naspers. Too big, too bureaucratic, and too dependent on Tencent.

But that narrative may be changing.

In its fiscal year ending March 2025, Prosus’ non-Tencent businesses turned free cash flow positive for the first time ever. Not just breakeven, actually positive, to the tune of $36 million. That’s up nearly $1 billion in three years. It’s a quiet milestone, but a massive one for investor confidence.

Why does this matter? Because until now, Prosus had to fund its operations by selling down its Tencent stake or relying on its Tencent dividend. That limited flexibility and spooked shareholders.

Now? Prosus can self-fund. That’s a game changer.

New Leadership, New Playbook

One overlooked detail: Prosus brought in a new CEO, Fabricio Bloisi, exactly one year ago. He’s not your typical corporate climber, he’s a founder. Bloisi built iFood, Brazil’s largest food delivery app, and led it to dominance before Prosus acquired it fully in 2022.

That matters. Founder-CEOs tend to think differently, more agile, more focused on outcomes than process. Since stepping into the CEO role, Bloisi has been on a mission to slim down costs, improve operating leverage, and close the valuation gap.

If that mission succeeds, it could unlock billions in hidden value.

A Smart Backdoor Into Chinese AI

So if you want exposure to China’s AI boom, Tencent is arguably the best-positioned company to win the long game, thanks to its scale, infrastructure, and ongoing investments in models like Hunyuan.

But directly owning Tencent comes with China geo-exposure and structural risks.

Naspers offers an alternative. It’s liquid, U.S.-accessible, and trades at a massive discount to the Tencent shares it indirectly owns. Plus, Prosus’ other businesses are finally generating cash, giving management the flexibility to invest, buy back shares, or pursue smart M&A, without selling down its golden goose.

If markets begin to reward profitability and self-funding, that discount could narrow. And if Tencent’s AI bets take off, the value of the underlying stake could soar.

In a market where pure AI stocks often trade at nosebleed valuations, Naspers might be one of the best under-the-radar AI plays anywhere in the world.