Tencent reported mixed second-quarter results, with revenue beating analyst forecasts while profitability fell short of expectations. The company’s overall revenue increased 11% year-over-year, while reported net profit rose nearly 1%. On an adjusted basis excluding one-time items and certain non-cash charges, profit reached 68.4 billion yuan, representing 9% growth compared to the prior-year period.
The company’s China gaming division provided a significant growth driver, with domestic games revenue reaching 47.3 billion yuan and climbing 17% year-over-year. This acceleration was fueled by popular titles including Delta Force and Valorant across PC and Mobile platforms. The quarterly performance marked a notable rebound from the 6% growth recorded in the first quarter of the year, matching the growth rate achieved in the second quarter of 2025. International gaming revenue declined 0.8% year-over-year due to currency headwinds, though revenue expanded 4% on a constant currency basis.
Tencent’s marketing services division also delivered strong performance, with revenue climbing 22% year-over-year to 43.6 billion yuan. The company attributed this growth to improvements in its AI-driven advertising recommendation system, which uses artificial intelligence to optimize ad placements across platforms including WeChat. The company continues to leverage its massive user base of over 1.4 billion people across Weixin and WeChat messaging services to drive monetization efforts.
Capital expenditures surged in the quarter, rising 65% sequentially to 52.8 billion yuan as the company accelerated investment in computing infrastructure for AI applications. The company stated it is substantially increasing procurement of compute capacity to enable conversion of AI application and model usage into revenue. Additionally, Tencent expanded its AI initiatives, including broader global rollout of its Hy3 AI model and continuation of small-scale prototype testing for its Xiaowei AI assistant within WeChat in China.
Tencent’s stock declined 26% year-to-date as of Wednesday’s close in Hong Kong, reflecting investor concerns regarding intensifying competition in artificial intelligence from companies like Alibaba, DeepSeek, and Moonshot AI, combined with apprehension over escalating capital spending levels.
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