Tencent Revenue Rises 11% Amid Massive AI Infrastructure Spend

Tencent Holdings Ltd. reported revenue of 204.8 billion yuan ($30.4 billion) for the quarter ended June, marking an 11% increase that exceeded analyst projections. This growth was primarily fueled by a 22% increase in marketing sales and a 17% rise in domestic gaming revenues.

Despite the revenue growth, net income remained nearly flat. The company attributed this stagnation to a one-time accounting loss related to an unlisted investee. To maintain competitiveness against rivals like Alibaba Group Holdings Limited and ByteDance Ltd., Tencent increased capital expenditures by over 65% to 52.8 billion yuan to fund AI infrastructure, specifically accelerators and memory chips.

Tencent is currently integrating AI into its WeChat super-app and expanding its WorkBuddy office tool. To offset these costs during a global gaming downturn, the company is reducing studio investments in Japan and trimming staff at its international LightSpeed and TiMi outposts. Following the earnings report, shares of major shareholder Prosus fell up to 4.4%.