Tencent Q2 revenue climbs 11% on AI-driven ad gains, but profit falls short
The Tencent logo at the company's headquarters during a government‑organised media trip in Shenzhen, Guangdong province, China, April 17, 2026. REUTERS/Go Nakamura
BEIJING, Aug 12 : Tencent Holdings reported an 11 per cent rise in second-quarter revenue on Wednesday, driven by strong advertising sales and steady gaming income, as the Chinese technology giant ramps up AI spending.
Net profit, however, rose only 0.7 per cent in the quarter from a year earlier to 56 billion yuan ($8.31 billion), falling short of analyst expectations of 61.8 billion yuan.
For the three months to the end of June, the Shenzhen-based gaming and internet company reported revenue of 204.8 billion yuan, in line with analyst estimates of 202.2 billion yuan, according to LSEG data.
Investors have been focused on whether Tencent's heavy AI spending is starting to generate returns, or merely weighing on margins.
Capital expenditure totalled about 79 billion yuan last year, up from 77 billion yuan in 2024, and the company has signalled AI investment will step up further in the second half of this year.
Capital expenditure in the June quarter was 52.8 billion yuan, compared with 31.9 billion yuan in the first quarter.
"We're comfortable in making significant investments in AI because not only is there substantial upside potential, there's also clear downside protection," Tencent President Martin Lau said on a post-earnings call.
He added that even renting out its compute capacity alone would be profitable — a fallback that left management comfortable.
The results come amid an accelerating AI product push by Tencent, which competes with the likes of ByteDance and Alibaba.
The company has built up a broad portfolio of AI products, including the Yuanbao chatbot and the WorkBuddy office assistant.
Revenue from value-added services, which include Tencent's gaming business, rose 8 per cent to 98.4 billion yuan. Domestic games revenue grew 17 per cent to 47.3 billion yuan supported by titles including "Honor of Kings" and "Delta Force", while international games revenue was down 0.8 per cent to 18.6 billion yuan due to foreign currency movements.
Marketing services revenue climbed 22 per cent to 43.6 billion yuan, as AI upgrades continued to boost advertising and pricing within its Weixin ecosystem, the network that combines messaging, payments and social media, among other services.
Fintech and business services revenue rose 9 per cent to 60.3 billion yuan, with cloud demand for AI-related services remaining a key driver.
In July, Tencent released Hy3, the latest version of its Hunyuan AI model, and last week opened it to users worldwide. It has also been testing an AI assistant inside its WeChat social media app since June.
($1 = 6.7419 Chinese yuan renminbi)
