Tencent Q2 revenue climbs 11% on AI-driven ad gains, but profit falls short
Net profit rose only 0.7% from a year earlier to 56 billion yuan
Tencent reported an 11% increase in revenue for the second quarter, reaching 204.8 billion yuan, with strong advertising sales and stable gaming income. However, net profit only grew by 0.7% from the previous year to 56 billion yuan, below expectations. The company's heavy investment in AI is causing investors to question if these expenditures are starting to yield returns or if they are negatively impacting margins.
Capital expenditure rose to 79 billion yuan, up from 77 billion yuan the previous year, with further AI investments planned for the second half of the year. The results come after Tencent intensified its AI product push, competing with companies like ByteDance and Alibaba. The company has developed a range of AI products, including the Yuanbao chatbot and WorkBuddy office assistant.
Revenue from value-added services, such as gaming, grew by 8% to 98.4 billion yuan, while domestic games revenue increased by 17% to 47.3 billion yuan, driven by popular titles like "Honor of Kings" and "Delta Force". International games revenue declined by 0.8% to 18.6 billion yuan due to foreign currency fluctuations. Marketing services revenue rose by 22% to 43.6 billion yuan, benefiting from AI enhancements within Tencent's Weixin ecosystem.
Tencent released Hy3, the latest version of its Hunyuan AI model, in July and made it available to users worldwide.
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- Tencent Q2 revenue climbs 11% on AI-driven ad gains, but profit falls short channelnewsasia.com
