Tencent Revenue Tops Forecasts On Gaming Surge, AI Ad Gains As Stock Rallies

Gaming revenue grew 24% year-on-year, driven by the release of titles like ‘Dungeon & Fighter Mobile’ and ‘Delta Force.’

Tencent Holdings’ ADRs (TCEHY) rose 4% on Wednesday after the Chinese tech giant reported revenue that exceeded Wall Street’s expectations, driven by a rebound in its gaming division and growth in AI-powered advertising.

The stock jumped more than 4% in midday trade.

The company reported first-quarter (Q1) revenue of 180 billion yuan ($24.97 billion), topping analyst estimates of $24.2 billion, according to Koyfin. However, net profit fell short, coming in at 47.8 billion yuan ($6.3 billion) versus expectations of $8.23 billion.

Tencent credited the performance to easing regulatory pressure in China’s gaming sector. 

Domestic gaming revenue rose 24% year-on-year (YoY) to 42.9 billion yuan, while international gaming revenue climbed 23% to 16.6 billion yuan. Titles like ‘Dungeon & Fighter Mobile’ and ‘Delta Force’ helped drive momentum.

Marketing services revenue rose 22% to 17.7 billion yuan, supported by AI-enhanced advertising technology that enabled more precise targeting. 

Meanwhile, the FinTech and Business Services segment, which includes consumer loans, cloud, and wealth management, posted revenue of 27.6 billion yuan, up 16%.

Tencent CEO Pony Ma said the company’s AI capabilities are already contributing tangibly to the business, “such as performance advertising and evergreen games.” 

“We also stepped up our spending on new AI opportunities, such as the Yuanbao application and AI in Weixin,” he added during the earnings call, using the Chinese name for WeChat. “We expect these strategic AI investments will create value for users and society, and generate substantial incremental returns for us over the longer term.”

The comments come amid Tencent ramping up its artificial intelligence spending. In March, it committed a low double-digit percentage of its projected 2025 revenue to capital expenditure, focused primarily on AI. That follows 39 billion yuan in AI-related investments made in the fourth quarter of 2024.

The company has also developed its own proprietary large language model, Hunyuan, and publicly launched a version called T1 in March. 

It also became the first major Chinese tech firm to integrate technology from DeepSeek, a local AI startup seen as a cost-efficient rival to Western peers. 

DeepSeek’s capabilities are now embedded in Tencent’s core platforms, including WeChat, which has over one billion active users, and its in-house AI assistant, Yuanbao.

Tencent’s stock has risen more than 28% this year and gained over 33% in the last 12 months.

(Exchange rate: 1 Yuan = 0.14 USD)<

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