Tencent cashes out over 10 billion yuan from Kuaishou, a major capital reshuffle in the AI era

On the evening of July 6, Kuaishou issued an announcement stating that the company had learned that Tencent Holdings, after the trading session that day, had sold 273 million Kuaishou Class B shares to several independent third parties via a block trade. After the transaction is completed, Tencent’s stake will drop from about 15.68% to 9.37%, and it will no longer be a major shareholder of Kuaishou.

Kuaishou emphasized in the announcement that Tencent expressed continued confidence in Kuaishou’s long-term prospects, and both parties will maintain a mutually beneficial relationship and continue their strategic cooperation; the company also expects that this sale will not have any material adverse impact on the group’s operations.

According to previous reports by Reuters, based on the placement price range of HKD 43.15 to HKD 44.53 per share, Tencent’s transaction is valued at up to about $1.6 billion (about HKD 12 billion, or over RMB 10 billion).

However, many Tencent investors have questioned the timing of Tencent’s reduction in its stake in Kuaishou. It’s worth noting that since the beginning of the year, Kuaishou’s share price has fallen nearly 27%, and the sale price of HKD 43.15 to HKD 44.53 is almost half of Kuaishou’s highest share price in 2026.

For the market, more noteworthy than "Tencent’s reduction in Kuaishou" itself is the signal behind the move: Tencent is continuously advancing the optimization of its investment portfolio, and the AI era is becoming the new direction for capital reallocation.

Looking back at the relationship between the two parties, Tencent participated in Kuaishou's financing as early as 2017 and continued to increase investment ahead of Kuaishou's IPO, becoming its largest institutional shareholder. After the listing, Tencent has not only been an important financial investor, but has also maintained cooperation with Kuaishou in areas such as traffic, content copyright, and mini-games.

Therefore, after the announcement of the stake reduction, Kuaishou specially emphasized in its announcement that the strategic cooperation between the two parties will remain unchanged.

In fact, from the perspective of shareholding ratio, after this sale Tencent still holds about 9.37% of Kuaishou shares, making it an important shareholder, though it is no longer considered a "major shareholder" under Hong Kong listing rules. This means Tencent withdraws only part of its capital investment, not its partnership with Kuaishou.

For Tencent, this is more like a continuation of investment strategy adjustments made over the past few years.

As a Chinese internet giant, Tencent was criticized over a decade ago for "doing everything." According to IT Juzi’s statistics on Tencent’s investment, the company’s investments over the years have covered 23 industries, including entertainment media, games, enterprise services, artificial intelligence, and e-commerce retail, reflecting diversified investment layouts.

Between 2012 and 2021, as the industry grew and opportunities emerged, Tencent seized the ticket to mobile internet in the consumer market—social networking and gaming—and participated in the industrial internet boom of cloud migration in the business market, achieving rapid income and profit growth.

However, in 2022, influenced by the economic environment, internet regulations, and sluggish business growth, Tencent’s revenue declined for the first time, dropping 1% year-on-year to RMB 554.6 billion.

Sensing the crisis, Tencent launched a new round of major changes in 2022, focusing on cost reduction and increased efficiency, and contracting non-core business. Meanwhile, Tencent slowed its external investments—selling stakes in succession and becoming more cautious in its investments.

Since the end of 2021, Tencent has successively reduced its holdings in several listed companies, such as JD.com, Sea Limited, New Oriental, and Meituan.

Different from earlier times when Tencent built its internet ecosystem via large-scale investments, the company now focuses more on optimizing its asset structure, improving capital efficiency, and increasing share buybacks and returns to shareholders.

Therefore, this reduction in Kuaishou stake does not imply a change in Tencent’s fundamental view of Kuaishou, but is part of its investment portfolio management.

A deeper reason comes from the shift in capital expenditure brought by the AI era.

For over three years, global internet companies have entered a race for AI infrastructure. Whether it is GPU procurement, data center construction, large model training, or the development of AI agent products, all require sustained and intensive capital investment.

Compared to continually holding equity in mature listed companies, cashing out some long-term investments and reinvesting into AI infrastructure can undoubtably improve capital efficiency.

Tencent President Martin Lau stated at the March earnings call that Tencent will invest RMB 18 billion in new AI products in 2025, and plans to at least double this in 2026.

From financial reports, Tencent is indeed increasing capital expenditure for AI. In the first quarter of 2026, Tencent’s capital expenditure reached RMB 31.936 billion, up about 63% quarter-on-quarter and about 16% year-on-year.

Meanwhile, Tencent’s external investments now are increasingly directed towards more growth-oriented AI businesses and new technology fields.

Just three days ago, Kuaishou announced the independent financing and restructuring plan for its subsidiary AI video generation platform, Koling AI, with total funding up to $3 billion, introducing several internet giants and industry capital including Tencent, Alibaba, and Baidu, with a pre-money valuation of $15 billion.

Tencent, as a key participant in Koling AI’s latest round of financing, plans to invest about RMB 1.363 billion through two entities, accounting for about 1.12% of shares.

These two capital moves—one preceding, one following—appear contradictory, but actually validate that Tencent's investment logic is changing. Compared to holding large equity stakes in mature internet platforms, Tencent now prefers to allocate funds directly to higher growth AI businesses.

From this perspective, Tencent’s reduction in holdings is more like a "capital reallocation"—switching mature investment returns to the next round of technological cycles.

Risk Disclosure and DisclaimerThe market has risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users' unique investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investments based on this are at your own responsibility.