Tencent beats revenue forecasts on AI advertising and gaming growth

Tencent Holdings Ltd surpassed some analysts’ quarterly revenue estimates, driven mainly by AI advertising and increased gaming revenues. The Chinese multinational firm recorded a 15% increase in year-on-year revenue to 184.5 billion yuan ($25.7 billion) for Q2, exceeding analysts’ forecast by 3%. 

The company recorded a net income increase of 17% which was primarily attributed to the company’s improved margins across advertising and gaming divisions. The company attributed AI-driven advertising and growth across gaming and social media initiatives to the posted results’ key drivers.

Stock prices in the company’s major shareholders, Prosus NV, a Dutch investment firm, rallied by 3.9% in the EU market following the announcement. 

Tencent stock surges 30% in 2025 but remains 26% below its ATH

Tencent, a Chinese multinational technology firm, has been at the forefront of advancing AI research. It focused on incorporating AI technology across all its products rather than launching new AI platforms. Its proprietary Hunyuan model and DeepSeek’s R1 powers its gaming and social media applications. The company’s cloud platform provides computing resources for clients developing AI systems. Competitors like Alibaba and ByteDance have also rolled out their models amid the AI race. 

The Chinese firm relied on its gaming franchise and WeChat super-app to support the growth in Q2 revenue amid the recovery process from several years of regulatory oversight, pandemic-related disruptions, and the most recent Trump tariffs.  The company has lined up upcoming releases in the gaming division, which are expected to boost the results further in Q3. 

Valorant Mobile is scheduled to launch next Tuesday, a mobile adaptation of Riot Games Inc.’s popular title. An open-world game in an established universe is in development, plus additional games are expected to be revealed at the Gamescom event in Germany next week. 

The Chinese technology firm’s stock increased by more than $170 billion in market value in 2025, a 30% increase, but it remains 26% below its all-time high. The company stock is trading at 17.6 times estimated forward earnings compared to its five-year average of 20 times and lower than its global rivals like Meta and Sony Group, which are trading at higher valuations. Some analysts have forecasted that Tencent’s 12-month forward earnings per share will be at high values.

Tencent bets on WeChat’s AI tools and gaming dominance 

WeChat, a social platform developed by Tencent, has over one billion users and remains one of the most valuable assets for the Chinese technology firm. The platform generates revenue via features such as Search and Short-video advertising. WeChat Pay has, however, received competition from Ant Group Co., which has accumulated a customer base of more than 100 million users for its tap-to-pay service. 

The executive team at Tencent has revealed its confidence in WeChat, which plays a central role in the generative AI era. They stressed that WeChat’s miniprogram ecosystem is potentially evolving into an operating system for autonomous AI tools. The company also deployed AI models for in-game content creation, such as automated avatar generation and digital assets. 

The company avoided aggressive spending on e-commerce, where rivals such as Alibaba have competed through subsidies to maintain its high revenue source. According to some analysts, Tencent diversified its revenue base across fintech, advertising, and gaming, providing them with a cushion against market uncertainty. 

The Chinese conglomerate AI strategy focuses on operational efficiency. For instance, Hunyuan -A13B model uses 80 billion parameters but activates only 13 billion during inference, which reduces computational costs. 

Tencent reiterated its readiness to tackle geopolitical tensions and global economic uncertainties, which pose risks to its second-half of the year financial performance. The company cited a combination of its core gaming strengths, growing AI capabilities, and a dominant social media presence as the tools that will likely help it maintain the growth momentum in Q3 and Q4.

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