Tencent Holdings’ double-digit earnings growth streak since 2023 ended in the second quarter amid heavier investments in artificial intelligence.
Tencent’s bread-and-butter gaming business remained a steady source of revenue in the second quarter, with domestic games revenue rising 17%.
The profit slowdown came as the Shenzhen-based company, China’s largest by market capitalization, said it is more than doubling its AI spending this year, targeting both foundational models and AI agents for deep ecosystem integration.
The videogame and social-media company said Wednesday that second-quarter net profit was 56.02 billion yuan, equivalent to US$8.30 billion, up 0.7% from the same period last year. That missed the 58.51 billion yuan expected by analysts in a Visible Alpha poll. Its adjusted net profit grew 9%.
Revenue climbed 11% to 204.785 billion yuan, slightly ahead of market expectations.
The aggressive spending has come to some fruition, with Tencent reporting promising progress on the AI front in recent months. It officially released its Hy3 model in July, boasting improved model performance, greater stability and cost efficiency. The average daily token consumption of the preview version has increased 20-fold since its April launch.
The WeChat operator has also started testing an AI agent in its superapp, making the assistant tool available to a small fraction of its 1.44 billion users. Meanwhile, its AI desktop agent, WorkBuddy, which is capable of independently executing workflows, has become China’s most widely used office agent.
Tencent’s capital expenditure more than doubled from a year earlier to 52.78 billion yuan in the second quarter.
The company’s bread-and-butter gaming business remained a steady source of revenue in the second quarter, with domestic games revenue rising 17% thanks to deferred gross receipts from the previous quarter.
