(Bloomberg) – Tencent Holdings Ltd.'s revenue strengthens investors' expectations that the growing gaming and social media portfolio will offer dry powder to bolster the global AI race.
Revenue for the three months ended in June rose to 184.5 billion yuan ($25.7 billion), compared to an average of 179 billion yuan. Compared to the forecast of 50.8 billion yuan, net profit for that period was 55.6 billion yuan.
China's most valuable company is to accelerate spending on AI research and product deployment after a series of rivals launch an open source model to compete with Openai and the like. Deep Shenzhen's company relies on Marquee's gaming franchise and super app Wechat to fund such initiatives. But this year's potential global slump — coupled with the Trump administration's tariff campaign — could hurt Tencent's vast online business from payments to advertising and cloud computing.
The world's largest game publisher will launch a meticulously viewed revenue season for a major Chinese tech company riding on investor Euphoria, centering on the success of Deepseek's breakout. After years of regulatory scrutiny and community disruption, the country's biggest tech company is once again bolstering its deals and users are competing fiercely to drive growth. Like Big Tech in the US, much of the industry's attention also focuses on how to invest in AI.
Tencent alone has earned more than $170 billion this year, but some analysts believe it is undervalued compared to peers such as Meta Platforms Inc.
The company's AI initiatives include integrating Deepseek's R1 and Hunyuan models into a single product or game, and renting computing to clients keen to training and operating AI systems. However, with a 30% increase in 2025, the Qwen family of Alibaba Group Holding Ltd.'s consistently ranks among the industry's top performers.
What Bloomberg Intelligence says
Tencent's revenue growth could fall from 25% in the first quarter to about 9% in the second quarter, following the seasonal peak of the domestic video game business. The internet giant needs to be free from US tariffs, but its fintech and advertising divisions remain exposed to potential secondary effects. Tencent's growth is set to normalize this year after the exceptional 2024 2024, with revenue growth slowing to a 10x percentage range. Rising geopolitical pressures and economic headwinds pose risks in two hours, although they are better positioned to navigate these than e-commerce peers.
Click here for more information about the investigation.
Tencent is trying to maintain growth in its gaming sector and remains the largest source of revenue for the company. It won some of 2024's biggest hits from DNF Mobile to Delta Force.
Beyond revenue, the market is looking forward to the release of Valorant Mobile next Tuesday, the highly anticipated smartphone version of Riot Games Inc.'s inventive title. According to Goldman Sachs Inc., the title should help drive Tencent's revenue from the second half of this year until the first half of 2026. The company is scheduled to unveil a new one at Gamescom in Germany next week.
It also focuses on margin protection over some of its rivals. Tencent has stayed from an increasingly fierce battle in e-commerce, where Alibaba, Meituan and Jd.com Inc. are trying to get each other up with subsidies. The trio is expected to report revenue in the coming weeks starting on JD.com on Thursday.
With over 1 billion users, WeChat remains Tencent's most reliable asset as it places more burden on regional monetization, from mini-games to advertising.
The ubiquitous Chinese app removes the major revenue streams of Tiktok-Owner Bytedance Ltd. and posts more ads within features such as search and short video feeds. However, WeChat Pay is facing a new battle with Alibaba-Affiliate Ant Group Co., which has attracted 100 million users who have acquired tap-to-pay features in stores and restaurants.
Tencent hopes that WeChat will continue to be a killer app in the generation AI era. Executives argue that its unique ecosystem of mini-programs could evolve to become an operating system for agent AI tools that autonomously perform tasks on behalf of users. The company has deployed a set of AI tools that allow game designers to generate in-game avatars and assets.
– Supported by Luz Ding, Henry Ren, Vlad Savov, Ville Heiskanen, and Amy Thomson.
More stories like this are available at bloomberg.com
