Chinese tech giant Tencent posts revenue beat on accelerating games sales, AI-driven ads
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- Tencent posted Q2 revenue of 204.78 billion yuan ($30.36 billion), beating the 202.17 billion yuan LSEG estimate, with revenue up 11% year-on-year.
- Tencent's net profit of 56 billion yuan missed the 61.82 billion yuan estimate, though adjusted profit stripping out one-time items rose 9% year-on-year to 68.4 billion yuan.
- Tencent's domestic games revenue grew 17% year-on-year to 47.3 billion yuan, driven by Delta Force and Valorant PC and Mobile, accelerating from 6% growth in Q1.
- Tencent's international games revenue fell 0.8% year-on-year due to currency headwinds, though it rose 4% on a constant-currency basis.
- Tencent's marketing services revenue jumped 22% year-over-year to 43.6 billion yuan, supported by AI-driven enhancements to its ad recommendation model.
- Tencent raised capital expenditures 65% quarter-on-quarter to 52.8 billion yuan, launched its Hy3 AI model globally, and began prototype testing its Xiaowei AI assistant within WeChat.
- Tencent stock was down 26% year-to-date at Wednesday's Hong Kong close amid rising AI competition from Alibaba, DeepSeek, and Moonshot AI.
Why it matters: Tencent shareholders got a split Q2: revenue beat expectations but profit missed, capex jumped 65% to 52.8 billion yuan for AI infrastructure, and the stock sits 26% below its year-start price as competition intensifies from Alibaba, DeepSeek, and Moonshot AI — with the company itself noting investors have grown jittery about rising spending.
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