Tencent sees fastest growth since 2021, revenue surges 13%
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The news: China’s biggest tech company, Tencent Holdings, reported that revenue grew at the fastest pace in over three years in the first quarter, driven largely by its gaming and AI-enhanced advertising businesses.
The numbers: Tencent reported a 13% rise in first-quarter revenue reaching 180 billion yuan ($38.6 billion). The results exceeded the 174.6 billion yuan average estimate from analysts polled by LSEG. The company saw net profit reach 47.8 billion yuan.
Tencent’s gaming business saw domestic games revenue lift 24% year on year to 42.9 billion yuan, while its international gaming business raked in 16.6 billion yuan in revenue, a year-on-year rise of 23%.
Tencent has also begun monetising its WeChat social media platform which hosts over 1.4 billion monthly users. Marketing services revenue increased 20% on the year to 31.9 billion yuan, with the company saying it experienced “robust advertiser demand” for its video accounts, mini programs and WeChat search inventories.
The context: The strong numbers are in keeping with investors’ position that Tencent is largely immune to the trade-war uncertainty that has hammered tech companies with supply chains that are vulnerable to rising tariffs.
Tencent has benefitted from the DeepSeek boom which saw it buy up artificial intelligence chips to integrate DeepSeek’s highly efficient and affordable R1 AI model into its WeChat and Yuanbao platforms.
Tencent also flagged that its capital expenditures for the quarter ending 31 March rose 91% from the same period last year to 27.5 billion yuan, as it ploughs capital into artificial intelligence projects.
What they said: Tencent’s earnings report reads: “We believe the operating leverage from our existing high-quality revenue streams will help absorb the additional costs associated with these AI-related investments and contribute to healthy financial performance during this investment phase. We expect these strategic AI investments will create value for users and society, and generate substantial incremental returns for us over the longer term.”
