Chinese technology company Tencent is a gaming giant and the parent company of WeChat, the ubiquitous social messaging app in China.Cheng Xin | Getty Images News | Getty ImagesTencent posted better second-quarter revenue thanks to an acceleration in its China gaming unit and AI-powered advertising, but its top-line earnings fell short of analysts’ expectations. The Chinese tech giant also reported an increase in capital spending in the quarter. Here’s how Tencent fared in the second quarter compared to LSEG estimates: Revenue: 204.78 billion Chinese yuan ($30.36 billion) vs. 202.17 billion yuan expected Net profit: 56 billion Chinese yuan vs. 61.82 billion yuan expected Revenue rose 11% year-on-year, while profits rose nearly 1%. Tencent said that excluding one-time factors and certain non-monetary items, its profit was 68.4 billion yuan in the quarter, up 9% from the same period last year. Tencent said its domestic gaming revenue reached 47.3 billion yuan, up 17% year-on-year, driven by key titles such as Delta Force and Valorant PC and Mobile. That was faster than the 6% growth the division saw in the first quarter of this year, and the same level seen in the second quarter of 2025. However, the company’s international gaming revenue fell 0.8% year-on-year due to currency movements, Tencent said. Revenue increased 4% in constant currency. Tencent is one of the largest gaming companies in the world and both domestic and international revenue is closely watched by investors. Tencent shares were down 26% so far this year at Wednesday’s close in Hong Kong, as the company faces intense competition in China in AI and investors become increasingly nervous about its growing spending. The company also saw a slowdown in gaming growth in the first quarter of the year. Stock Chart Icon Stock Chart Icon Tencent stock so far this year. Ads drive revenue with AI in focus The company has sought to leverage its huge user base of more than 1.4 billion people for Weixin and WeChat, China’s most popular messaging app. In June, Tencent began testing an AI assistant called Xiaowei within WeChat in China. Tencent said on Wednesday it had begun a “small-scale prototype test” for Xiaowei in recent weeks. Last month, Tencent also launched Hy3, its latest AI model, which it has since expanded globally. But Tencent faces plenty of competition in the AI space, from established titans like Alibaba to new entrants like DeepSeek and Moonshot AI, the developer of the Kimi models. Still, the company said capital expenditures for the June quarter rose 65% to 52.8 billion yuan from the previous quarter, as it continues to ramp up purchasing and building computing infrastructure to monetize its AI models. “At the infrastructure level, we substantially increased our computing acquisition, which will allow us to convert the use of our applications and models into revenue in the future,” Tencent said. Another driver of growth in the quarter was Tencent’s marketing services, aided by AI. The division’s revenue rose 22% year-over-year to 43.6 billion yuan, supported by “improvements” to Tencent’s AI-powered advertising recommendation model, the company said. This feature uses AI to decide which ads to show users on Tencent platforms such as WeChat. Overall, Tencent posted rising gross profits across all its major divisions as it seeks to convince investors that its investments are paying off. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
