Chinese tech giant Tencent’s quarterly revenue rises 15%, fueled by AI
News Summary
Tencent reported a 15% year-on-year revenue growth in Q3 2025, reaching 192.9 billion Chinese yuan ($27.12 billion), surpassing analyst expectations of 189.2 billion yuan. Operating profit also exceeded forecasts at 63.6 billion yuan. Artificial intelligence played a significant role in boosting the Chinese tech giant's performance in advertising targeting and gaming. Its core business, encompassing gaming, marketing, and social media services, grew 16% year-on-year to 95.9 billion Chinese yuan. Domestic games revenue rose 15%, driven by the successful launches of “Delta Force” and “VALORANT MOBILE,” with the latter becoming China’s most successful mobile game launch year-to-date. International gaming, a rapidly growing segment, soared 43% year-on-year to 20.8 billion Chinese yuan, attributed to “Clash Royale,” “Dying Light: The Beast,” improved Supercell game revenues, and an acquisition. Tencent increased its capital expenditure earlier this year to ramp up AI development and pursue European expansion for its cloud computing services, aiming to compete with market leaders like Amazon Web Services, Google Cloud, and Microsoft Azure. The company updated its foundational AI model, HunYuan, enhancing its coding, math, and science capabilities, and also utilizes DeepSeek in some products. Tencent shares have risen 56.7% year-to-date.
Background
Tencent is a leading Chinese technology conglomerate with extensive businesses including gaming, social media (WeChat), fintech, cloud computing, and advertising. In recent years, the company has been dedicated to the development of artificial intelligence, particularly its HunYuan foundational model, reflecting a broader industry trend among tech giants to integrate AI across their product ecosystems for competitive advantage. To diversify revenue streams and mitigate potential domestic market risks, Tencent has actively expanded into international markets, particularly in gaming and cloud computing services. The strong growth in its international gaming business and its push into the European cloud services market are crucial components of its globalization strategy. The global technology industry is currently undergoing profound changes driven by AI technology, with tech companies worldwide increasing investments to gain a leading position in this new technological race.
In-Depth AI Insights
How sustainable is Tencent's AI-driven growth, and what are the strategic implications of its international expansion? - Tencent's integration of AI into core businesses like advertising and gaming is a key driver of current revenue growth. However, competition in the global foundational AI model space is intensifying, particularly against U.S. tech giants, requiring Tencent to continuously invest in R&D to maintain its lead. - The robust growth in international gaming (43%) indicates its globalization strategy is paying off, helping the company reduce reliance on the domestic market and mitigate potential regulatory risks. At the same time, its expansion into the European cloud services market will face intense competition from established giants like Amazon Web Services, Google Cloud, and Microsoft Azure, potentially requiring longer investment cycles and greater capital expenditure for significant market share. - Given current geopolitical trends of de-risking and supply chain localization in the tech sector, Tencent's cloud expansion in Europe may face additional scrutiny and challenges. This is not just about technical and market competition but a strategic game influenced by national security and data sovereignty considerations. What do Tencent's increased capital expenditure and investment in AI models like HunYuan and DeepSeek signify for investors? - Tencent's increased capital expenditure for AI R&D and cloud expansion signals a strategic transformation from a traditional