Tencent Q2 revenue climbs 11% on AI-driven ad gains, but profit falls short

Tencent reported an 11% increase in revenue for the second quarter, with growth stemming from advertising and gaming earnings, despite net profit only growing 0.7% to 56 billion yuan. Analysts had predicted a profit of 61.8 billion yuan. For the first three months of the year, Tencent's revenue stood at 204.8 billion yuan, matching analysts' estimates of 202.2 billion yuan.

Investors are closely monitoring whether Tencent's increased AI spending is beginning to yield returns or merely impacting profitability. The company's capital expenditure last year reached 79 billion yuan, up from 77 billion yuan in the previous year, with further AI investments planned for the second half of the year. Tencent President Martin Lau expressed confidence in these investments, stating that renting out compute capacity would also be profitable.

Revenue from value-added services, including gaming, rose 8% to 98.4 billion yuan. Domestic game revenue increased 17% to 47.3 billion yuan, driven by popular titles such as "Honor of Kings" and "Delta Force," while international game revenue fell 0.8% to 18.6 billion yuan due to foreign currency fluctuations. Marketing services revenue climbed 22% to 43.6 billion yuan, benefiting from AI enhancements within Tencent's Weixin ecosystem.

Fintech and business services revenue grew 9% to 60.3 billion yuan, with AI-related services being a major contributor. Tencent recently unveiled Hunyuan AI model version Hy3 and has been testing an AI assistant in its WeChat app since June.