Revenue grows 14%! Fully integrated into gaming, advertising, and cloud—how far can Tencent's AI engine go?

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On March 18, Tencent (0700.HK) released its full-year results for 2025, reporting total revenue of 751.766 billion yuan, an increase of 14% year-over-year; profit attributable to equity holders was 224.842 billion yuan, up 16% year-over-year.

Tencent stated in its earnings report that its growth was driven by AI technology enhancing ad targeting capabilities and player interactions in games, as well as accelerated revenue growth in the cloud business, which achieved scaled profitability.

Looking at a longer timeline, investment in AI has helped Tencent emerge from a downturn. From 2022 to 2024, Tencent’s revenues were RMB 554.55 billion, RMB 609.02 billion, and RMB 660.26 billion, representing year-over-year growth of -1%, 10%, and 8%, respectively; net profit attributable to shareholders was RMB 188.24 billion, RMB 115.22 billion, and RMB 194.07 billion, with year-over-year growth of -16%, -39%, and 68%, respectively.

What new story will AI bring for Tencent?

All businesses achieved growth

Currently, Tencent still divides its operations into four segments: value-added services, marketing services, fintech and enterprise services, and others.AI is being integrated into all segments of Tencent. By deploying AI in games, it has accelerated content production, improved user experience, and enhanced marketing efficiency; upgraded the foundational models of its advertising technology and launched the Tencent Ads AIM+ suite of intelligent placement products; upgraded teams by bringing in top AI talent, established systematic processes to improve the intelligence level of foundational models, and deployed new AI capabilities in services such as Yuanbao and WeChat.

In 2025, Tencent's value-added service revenue reached RMB 369.28 billion, growing 16% year-over-year and accounting for 49% of total revenue. Among this, domestic gaming market revenue was RMB 164.2 billion, increasing 18% year-over-year, primarily due to strong performance from 'Delta Operations,' evergreen titles like 'Honor of Kings' and 'Peacekeeper Elite,' and revenue growth from the 'Valorant' series (on both PC and mobile). International gaming revenue was RMB 77.4 billion, up 33% year-over-year, benefiting from Supercell's titles and 'PUBG MOBILE,' along with incremental revenue contributions from 'Echoes of Retribution.' Social network revenue reached RMB 127.7 billion, growing 5% year-over-year, driven by increased revenue from live streaming on Video Accounts, paid music memberships, and sales of virtual items in mobile gaming apps.

Tencent's marketing services revenue in 2025 was RMB 145 billion, growing 19% year-over-year, mainly driven by increases in ad pricing and ad impressions.Ad pricing benefited from AI-driven precision targeting, advertisers using AI to create more ads, and an increasing proportion of closed-loop ads (where users can directly access mini-programs, WeChat Shops, or mini-games upon clicking). Impression growth was primarily due to higher user engagement with products including Video Accounts and WeChat Search, along with a slight increase in ad load rates. Meanwhile, most major industries saw increased ad spending.

During the same period, fintech and enterprise services revenue reached RMB 229.4 billion, growing 8% year-over-year. Fintech services revenue grew by a high single-digit percentage due to increased income from wealth management services, consumer loan services, and commercial payment activities. Enterprise services revenue grew nearly 20% year-over-year, driven by rising domestic and overseas demand for cloud services (including AI-related services) and increased merchant technical service fees due to rising transaction volumes on WeChat Shops.

Notably, Tencent Cloud has achieved scaled profitability for the first time. During the 2025 earnings call, Tencent mentioned that for a period, Tencent Cloud was influenced by industry peers and somewhat singularly pursued revenue growth.In 2022, the company carried out a significant restructuring of Tencent Cloud, focusing on high-quality services rather than pursuing high-revenue, low value-added businesses. This transformation led to several quarters of slower revenue growth but helped Tencent Cloud achieve operating profit breakeven in 2024, reversing previous substantial losses. In 2025, Tencent Cloud's revenue still faces some pressure but has seen substantial improvements in both revenue growth and profitability, with adjusted operating profit reaching 5 billion yuan.

The gradual implementation of AI stems from Tencent's continuous investment. In 2025, Tencent's capital expenditure reached 79.198 billion yuan, mainly including investments in IT infrastructure (including computer equipment, components, and software), data centers, land use rights, office campuses, and intellectual property (excluding media content); R&D investment hit 85.757 billion yuan, both setting new historical highs.

AI integration into product ecosystem

In 2025, Tencent conducted multiple organizational structure adjustments around AI. In January 2025, Tencent's 'Yuanbao' was transferred from TEG (Technology Engineering Group) to CSIG (Cloud and Smart Industries Group). In March, teams behind products like QQ Browser, Sogou Input Method, and IMA were also integrated into CSIG.

In April, Tencent established new departments for large language models and multimodal models, responsible for exploring cutting-edge technologies in large language models and multimodal models, continuously iterating foundational models, and enhancing model capabilities.

In December, Tencent upgraded its large model R&D architecture by establishing new departments: AI Infra, AI Data, and Data Computing Platform. Among these, AI Infra focuses on core technologies like distributed training and high-performance inference, building the technical foundation for large model R&D; AI Data is responsible for data and evaluation system construction; Data Computing Platform builds an intelligent fusion platform for big data and machine learning.

During this earnings call, Tencent also conveyed its development strategy of integrating AI into its product ecosystem. Tencent executives stated that for the AI application Yuanbao, they are focused on finding a market-fit product positioning and usage scenarios. Tencent is rapidly iterating Yuanbao, enhancing user experience through optimizing search integration, improving voice recognition capabilities, simplifying multimodal capability access, and exploring group chat functions. Tencent believes this will increase usage frequency and user retention.

Data shows that currently, Yuanbao has been integrated with QQ Music, Tencent Video, Tencent Meeting, as well as comment sections of official accounts and video accounts.

Meanwhile, during the earnings call, Tencent indicated that it is also embedding AI into a series of existing user scenarios within WeChat, including content consumption, information retrieval, product recommendations, and customer service. Additionally, Tencent is developing AI agents to autonomously interact on behalf of users within WeChat functions, especially mini-programs. The company hopes that WeChat’s AI agents can provide efficient AI productivity for regular users and early adopters, drive ecosystem activity, and naturally generate revenue.

Regarding investment, Tencent's executives stated that in the fourth quarter of 2025, their investment in two key new AI products, HunYuan and YuanBao, reached 7 billion yuan, with a total annual investment of 18 billion yuan. This data only pertains to HunYuan and YuanBao, excluding AI projects supporting existing product services and does not include costs incurred by Tencent Cloud for providing GPUs to external customers. It is expected that investments in HunYuan, YuanBao, and other new AI products will more than double in 2026, funded by the continued growth of core business revenues.Strategic investments in new AI products are akin to investments in associated companies or capital expenditures, representing upfront investments necessary to build the required foundation for unlocking new value rather than ongoing operational expenses.

Currently, Tencent has gradually integrated AI into its various business segments, making it a new engine driving growth. Overall, AI remains in the early stages of investment, and whether it can continuously propel Tencent’s business development remains uncertain. Meanwhile, other internet companies such as Alibaba are also expanding into AI. Whether Tencent can maintain its technological edge and craft a new narrative around AI depends not only on the scale of investment but also on its ability to productize and efficiently integrate ecosystems.

Author | Wu Ren

Source | Zhengtan Finance (ID: teccj6)

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