China’s Tencent beats Q2 revenue forecasts as gaming, AI fuel growth

Tencent reported second-quarter revenue growth of 15% on Wednesday, driven by robust gaming performance and deployment of AI across services and platforms including WeChat.

For the three months to June, the Chinese technology giant reported revenue of 184.5 billion yuan ($25.7 billion), exceeding analyst estimates of 178.5 billion yuan, according to LSEG data.

Gaming remained a key growth driver, with domestic revenue rising 17% to 40.4 billion yuan and international revenue climbing 35% to 18.8 billion yuan.

The strong performance was fueled by flagship titles including Honor of Kings and Dungeon & Fighter Mobile.

Marketing services revenue increased 20% year-on-year to 35.8 billion yuan, bolstered by the use of AI to enhance the targeting of adverts.

Net profit for the quarter reached 55.6 billion yuan, surpassing analyst expectations of 52.3 billion yuan, LSEG data showed.

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Tencent has significantly ramped up its AI investments over the past two years, with the company allocating increasingly large portions of its capital expenditure to AI initiatives.

The company’s total capital expenditure was 76.8 billion yuan in 2024 and management has said that 2025 capital spending would rise to the “low teens” as a percentage of total revenue.

Second-quarter capital expenditure more than doubled year-to-year to 19.1 billion yuan, according to the earnings release.

The company has developed its own large language model, Hunyuan, launching the latest “Turbo S” version in February.

But Tencent has also embraced third-party models, notably integrating DeepSeek’s technology across its platforms including WeChat, which has over 1 billion monthly active users.

Its AI assistant Yuanbao became China’s most-downloaded iPhone app in early March after the DeepSeek integration, overtaking DeepSeek’s own application.

($1 = 7.1756 Chinese yuan renminbi)