Revenue at Chinese IT giant Tencent rose 11%. It helps fund AI

Revenue at Chinese IT company Tencent Holdings rose 11%, exceeding forecasts and allowing the company to maintain the growth rate needed to finance its costly rollout of artificial intelligence infrastructure and services, according to Bloomberg. Last quarter, Tencent doubled its spending on AI.

At the end of the second quarter, Tencent’s revenue increased by 11% to 204.8 billion yuan ($30.4 billion). This is about 1% higher than analysts’ average forecast, Bloomberg noted. Net income, however, remained virtually unchanged due to a one-time accounting loss related to an unnamed private company in which Tencent has invested. The main drivers of revenue growth were a 17% increase in gaming revenue and a 22% jump in marketing revenue.

At the same time, Tencent’s capital expenditures more than doubled—rising 176% to 52.8 billion yuan ($7.83 billion). This reflects rising costs for AI accelerators and memory chips, Bloomberg explained. By comparison, rival Alibaba has pledged to allocate more than $50 billion over three years to AI infrastructure. Tencent refrained from setting multi-year goals, stating only that its investments in AI products will double this year.

The company's shares fell nearly 2% during trading in Hong Kong on August 12; year-to-date, they are down 23%. This year, Tencent’s market value has fallen by approximately $170 billion as global investors have shifted capital away from traditional technology platforms toward hardware manufacturers and specialized artificial intelligence developers, according to Bloomberg. A return to growth will depend on whether the company can convince investors that its investments in AI can deliver reliable revenue growth, rather than merely protecting its existing ecosystem, the agency believes.

China’s largest company has kicked off the country’s big tech earnings season, during which investors hope to gain clarity on the expected return on large-scale investments in artificial intelligence, Bloomberg notes. Tencent is showing early signs of success thanks to its Hunyuan AI foundation model and WorkBuddy virtual assistant.

The industry giant still has some catching up to do with ByteDance (the owner of TikTok) and Alibaba, but online advertising has become a rapidly growing segment that provides the company with a solid financial cushion for investments in technology, the agency reports.

In early August, Tencent unveiled the official version of its Hy3 AI model (the new brand for the Hunyuan lineup)—a major update led by former OpenAI researcher Yao Shunyu. The model faces stiff competition from Chinese open-source counterparts such as Moonshot AI’s Kimi, but the company has taken precautions: it participated in DeepSeek’s first round of funding and has integrated the startup’s V4 platform throughout its entire ecosystem, according to Bloomberg.

Drawing on its experience in product design, which dates back to the era of the mobile internet, Tencent is now attempting to transform WeChat—a popular messaging app in China—into an interface focused primarily on artificial intelligence. The company is testing a native AI agent built into the super app that can help users hail taxis and summarize group chats, acting as an operating-system-level assistant similar to Apple’s Siri. Tencent’s WorkBuddy assistant is also rapidly gaining popularity as the most sought-after office AI tool in China, racking up 21 million visits in June.

In the video game sector, the company relies on proven hits such as *Honor of Kings*, *Peacekeeper Elite*, and *Delta Force*. However, amid a global downturn in the gaming industry, it is taking a more cautious approach to international expansion, cutting investments in studios in Japan and streamlining the workforce at the overseas branches of its flagship studios, LightSpeed and TiMi, the agency notes.

This article was AI-translated and verified by a human editor