Tencent’s Revenue Beats Estimates in Boost for AI Ambitions
The market is looking forward to the launch of Valorant Mobile, a highly-anticipated smartphone version of Riot Games Inc.’s seminal title.
(Bloomberg) — Tencent Holdings Ltd.’s revenue climbed a better-than-anticipated 15%, bolstering investor expectations that its expanding gaming and social media portfolio will propel its efforts in a global AI race.
China’s most valuable company reported revenue of 184.5 billion yuan ($25.7 billion) for the three months ended June, about 3% higher than analysts’ projections. It managed double-digit growth in most major business segments including advertising, which it attributed to AI-driven enhancements. Shares in major shareholder Prosus NV extended gains in Europe, climbing as much as 3.9%.
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Tencent is accelerating spending on AI research after rivals from Alibaba Group Holding Ltd. to ByteDance Ltd. launched models to compete with the likes of OpenAI and Anthropic. But while others seek to outdo each other with a procession of platforms, Tencent’s approach focuses more on integrating the technology into its services and content — a point it reinforced in Wednesday’s results statement. DeepSeek’s R1 and its own Hunyuan model help power a suite of products and games, while Tencent’s cloud unit rents out computing to clients keen to train or run AI systems.
The world’s biggest games publisher kicks off a closely watched earnings season for Chinese big tech firms, which are riding investor euphoria around the breakout success of DeepSeek. After years of regulatory scrutiny and Covid-era disruption, the country’s biggest tech firms are once again ramping up deals and competing fiercely for users to propel growth.
Like Big Tech in the US, much of the industry’s attention is also focused on how to harness AI — and monetize it. The Shenzhen firm counts on marquee gaming franchises and super-app WeChat to fund such initiatives. On Wednesday, Tencent reported a faster-than-expected 17% rise in net income, driven by improving margins across most divisions.
Tencent has gained more than $170 billion of market value this year, though some analysts think it remains undervalued relative to peers such as Meta Platforms Inc. That 30% gain in 2025 trails Alibaba, whose Qwen family of models consistently ranks among the industry’s top performers. A potential global downturn this year — coupled with the Trump administration’s tariffs campaign – threatens to hurt Tencent’s sprawling online businesses from payments to advertising and cloud computing.
What Bloomberg Intelligence Says
Tencent’s earnings growth is likely to decelerate to about 9% in 2Q, down from 25% during 1Q, following the seasonal peak in its domestic video game business. The internet giant should remain relatively unaffected by US tariffs, though its fintech and ad divisions remain exposed to potential second-order effects, should China’s economic growth slow in 2H. Tencent’s growth is set to normalize this year after an exceptional 2024, with earnings growth due to decelerate to the mid-teen percentage range. Geopolitical pressure and rising economic headwinds present risks to 2H, though Tencent is better positioned to navigate these than its e-commerce peers.
– Robert Lea, analyst
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Tencent is trying to sustain growth at its games division, still the largest source of the company’s revenue. It scored some of 2024’s biggest hits from to .
Beyond earnings, the market is looking forward to next Tuesday’s launch of , a highly-anticipated smartphone version of Riot Games Inc.’s seminal title. Other upcoming titles include an open-world game set in the universe. The company is set to unveil new ones next week at Gamescom in Germany.
It’s also more focused on protecting margins than some of its rivals. Tencent has stayed out of an increasingly cutthroat battle in e-commerce, where Alibaba, Meituan and JD.com Inc. have sought to outspend each other with subsidies. The trio is slated to report earnings in coming weeks, starting with JD.com on Thursday.
With a billion-plus users, WeChat remains Tencent’s most dependable asset as it shoulders more of the burden on monetization in areas from mini-games to advertising.
The ubiquitous Chinese app is carrying more advertising within features like search and short-video feeds, chipping away at TikTok-owner ByteDance’s key revenue stream. Yet WeChat Pay faces a renewed battle with Alibaba-affiliate Ant Group Co., which has garnered 100 million users for a tap-to-pay feature at stores and restaurants.
Tencent hopes WeChat will remain the killer app of the generative AI era. Its ecosystem of mini-programs, executives argue, could evolve to become an operating system for agentic AI tools that autonomously perform tasks on behalf of users. The company has also rolled out a series of AI tools for game designers to generate in-game avatars and assets.
–With assistance from Luz Ding, Henry Ren, Vlad Savov, Ville Heiskanen and Amy Thomson.
