Tencent Q4 Profits Nearly Double! AI Dominates, But Can Growth Momentum Last Through 2025?

TradingKey — Driven by robust advertising and gaming performance, Tencent Holdings (0700.HK) delivered better-than-expected revenue and profit growth for Q4 2024 and the full year. While the tech giant is aggressively embracing AI, analysts warn that its 2024 momentum may struggle to sustain into 2025.

On Wednesday, March 19, Tencent released its 2024 annual and Q4 results, highlighting three key achievements:

1. Achieved High Quality Revenue Growth with Sustained Operating Leverage
2. More Than Doubled Share Repurchase to Approximately HKD112bn 
3. Stepping Up AI Investment for Growth 

FY2024 Financial Highlights:

• Revenue: RMB 660.3 billion (US$91.9 billion), up 8% YoY
• Net profit (IFRS): RMB 194.1 billion (US$27 billion), up 68% YoY
• EPS (IFRS): RMB 20.938

Q4 2024 Financial Highlights:

• Revenue: RMB 172.4 billion (US$24 billion), beating estimates of RMB 168.9 billion, up 11% YoY
• Net profit (IFRS): RMB 51.3 billion (US$7.1 billion), matching forecasts, up 90% YoY
• EPS (IFRS): RMB 5.597

All four core business segments grew in Q4:

• Value-Added Services: +7% YoY
• Advertising: +20% YoY
• FinTech and Business Services: +4% YoY
• Others: +44% YoY

Gaming Strength:

• International games revenue rose 9%, fueled by PUBG MOBILE and Supercell titles.
• Domestic games grew 10%, driven by Valorant, Golden Shovel War, and League of Legends: Wild Rift, cementing Tencent’s global gaming leadership.

Advertising Boom:

Demand for ad inventory on Video Accounts, Mini Programs, and Weixin Search—combined with AI-powered ad tech upgrades—propelled growth across most advertising categories.

CEO Ma Huateng emphasized AI’s critical role in the earnings report:

• AI-powered ad platform upgrades contributed to Q4’s double-digit revenue growth.
• Restructured AI teams now focus on product innovation and model development.
• Increased capital expenditure toward native AI products in R&D and marketing.
• Accelerating adoption of AI by individuals and enterprises will create long-term value.

However, Bloomberg analyst Robert Lea expressed doubts about Tencent’s AI monetization capabilities, warning that 2025 earnings expectations may fall short. Challenges include: inclusion on the U.S. Department of Defense’s blacklist, macroeconomic headwinds and normalization of 2024’s exceptional profit surge.

Tencent shares have risen 29.5% year-to-date in 2025, trailing Alibaba’s (9988.HK) 71.24% rally amid China’s AI-driven tech frenzy.