Tencent Holdings reported an 11% rise in second-quarter revenue on Wednesday, fueled by strong advertising sales and steady contributions from its gaming division.
The Shenzhen-based technology giant posted revenue of 204.8 billion yuan, equivalent to approximately $30.36 billion, for the three months ended June.
That figure came in ahead of analyst estimates of 202.2 billion yuan, signaling resilient demand across Tencent’s core business segments despite a challenging macroeconomic environment.
Net profit, however, told a more complicated story, rising just 0.7% year-on-year to 56 billion yuan, falling short of analyst expectations of 61.8 billion yuan.
The gap between revenue growth and profit performance reflects the mounting cost of Tencent’s aggressive push into artificial intelligence infrastructure and compute capacity.
The company recorded negative free cash flow of RMB 13.8 billion in the quarter, as capital expenditure and AI-related compute prepayments offset operating cash generation.
Net cash dropped sharply to RMB 58.2 billion from RMB 146.9 billion at the end of March, underscoring how rapidly the company is deploying capital toward AI ambitions.
Tencent’s domestic games revenue reached 47.3 billion yuan, up 17% year-on-year, driven by key titles including Delta Force and Valorant across both PC and mobile platforms.
That 17% growth rate represented a meaningful acceleration from the 6% expansion the division recorded in the first quarter of this year.
On the AI product front, WorkBuddy and CodeBuddy were achieving breakout user growth, signaling early traction for Tencent’s enterprise and developer-focused AI tools.
The company’s latest Hy3 production model ranked among the top three globally by token consumption on OpenRouter following its July launch, a notable benchmark for a model competing in an increasingly crowded field.
Tencent has also begun testing Xiaowei, an agentic AI assistant embedded inside Weixin, its dominant messaging and social platform with over a billion users.
The integration of AI assistants into Weixin represents one of the most consequential product bets Tencent is making, given the platform’s central role in daily Chinese digital life.
Tencent’s results arrive as technology companies globally face intensifying scrutiny over whether massive AI investment cycles will translate into proportionate returns for shareholders.
The sharp decline in net cash and the swing to negative free cash flow will likely draw attention from investors watching whether Tencent can sustain its AI spending without compromising financial flexibility.
