BRIEF: Tencent profit rises 11% amid stepped-up AI investment

Internet giant Tencent Holdings Ltd. (0700.HK) on Wednesday reported its revenue rose 9.1% year-on-year to 196 billion yuan ($28.93 billion) in the first quarter. Its non-IFRS profit rose by 10.7% to 67.9 billion yuan, while its profit under IFRS accounting standards rose 21.5% to 58.1 billion yuan.

The company’s domestic games revenue grew 6% year-on-year to 45.4 billion yuan, missing market expectations. Management said the slower growth was mainly due to the later timing of the Lunar New Year holiday this year, which caused part of the revenue to be deferred to the second quarter. The company added that evergreen titles including “Honor of Kings” and “Game for Peace,” together with newer games such as “Delta Force,” drove its gross receipts for domestic games to record double-digit growth. International games revenue rose 13% to 18.8 billion yuan.

By comparison, advertising and enterprise services remained the company’s main growth drivers. Marketing services revenue increased nearly 20% year-on-year to 38.17 billion yuan, benefiting from upgrades to AI-powered advertising recommendation models and stronger closed-loop marketing capabilities within the WeChat ecosystem. Revenue from fintech and business services rose 9% to 59.9 billion yuan, while enterprise services revenue grew 20%, reflecting continued growth in demand for AI-related cloud services.

Tencent also continued to ramp up its investment in AI. Capital expenditure reached 31.9 billion yuan in the first quarter, up 16% year-on-year and 63% quarter-on-quarter. The company disclosed that, excluding the impact of AI-related products such as Hunyuan, Yuanbao, CodeBuddy and WorkBuddy, its adjusted operating profit would have risen 17% to 84.4 billion yuan.

Tencent also said its new Hy3 Preview large language model, launched in April, has become one of the most widely used models on OpenRouter in terms of token consumption, citing its strengths in reasoning, AI agents and coding capabilities.

Tencent shares opened higher on Thursday but later turn lower, closing at HK$462.2 by the midday break, down 0.09%. The stock is down more than 22.8% year-to-date.

By Lee Shih Ta

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