Economic developments: Tencent rents computing capabilities from Oracle, stability of the American labor market, and Saudi Arabia’s 2027 budget expectations

The Chinese company “Tencent” has concluded a huge agreement with the American “Oracle” to rent computing capabilities based on about 100,000 advanced artificial intelligence chips that are not available in China, in a step that reflects the escalation of the race by Chinese technology companies to secure the computing power necessary to develop artificial intelligence models, amid tightening American restrictions on the export of advanced semiconductors.

The Financial Times reported, in a report citing people familiar with the matter, that the agreement represents the largest external leasing deal concluded by Tencent, and includes the use of multiple Oracle data centers in Southeast Asia.

According to the report, during the current year, the two companies reached an agreement spanning 5 years, with an estimated value of about $7 billion, with Tencent paying about 30 percent of the value of the deal in advance. This reflects the Chinese company's commitment to expanding its computing capabilities in the long term.

The deal highlights the significant increase in Tencent's needs for computing capabilities, as it intensifies its investments in developing and operating large language models and other artificial intelligence applications that require huge numbers of advanced processors.

New claims for unemployment benefits fell in the United States last week, and layoffs also declined in September, a sign of continued stability in the labor market, although employers remain cautious about increasing hiring.

Saudi public finances enter 2027 from a different base than the current year, with expectations of a strong growth recovery after the contraction associated with a decline in oil production, at a time when the non-oil economy has shown an increasing ability to support activity and mitigate the impact of the oil shock. The preliminary budget statement reflects the continued bet on investment spending and diversifying sources of growth, in parallel with a path aimed at gradually reducing the deficit in the coming years.