Tencent hits 7 trillion again
Author | Huang Yu
Editor | Wang Xiaojuan
Tencent, which is making significant investments in AI, has given investors another dose of reassurance. After delivering a "battle report" in the second quarter that exceeded market expectations, Tencent's third quarter results have continued to hold strong.
On November 13, Tencent Holdings (00700.HK) released its financial report for the third quarter of 2025, showing total revenue during the reporting period reached RMB 192.87 billion, up 15% year-on-year, matching the previous quarter's growth rate; meanwhile, Non-IFRS net profit attributable to shareholders soared to RMB 70.55 billion, an 18% year-on-year increase, far surpassing market expectations.
With Tencent's strong performance recovery, coupled with its steadfast investment in AI strategies, Tencent is also experiencing a value reassessment. A research report from Guohai Securities stated that, according to the SOTP valuation method, it gives Tencent Holdings a total 2026 target market capitalization of RMB 6.5 trillion/HKD 7.1 trillion, corresponding to a target price of HKD 773, while maintaining a "buy" rating.
In fact, since the beginning of the year, Tencent’s stock price has risen nearly 60%, at one point approaching the all-time high set in 2021. As of the November 13 close, total market capitalization reached HKD 6 trillion, and a return to the HKD 7 trillion peak doesn’t seem far off.
AI is injecting new growth momentum into this internet giant. At the same time, because Tencent has kept away from this year’s hottest and most money-burning “instant retail war” in the internet industry, some brokerage houses believe Tencent is likely to be the only publicly listed Chinese internet giant to achieve year-on-year profit growth in the third quarter.
Amid the ongoing AI frenzy, outside scrutiny of Tencent’s financial report naturally focuses more on AI.
Looking at the capital expenditure reflecting Tencent’s determination to invest in AI, the company is currently relatively cautious.
The report shows that in the third quarter of this year, Tencent’s R&D spending reached RMB 22.82 billion, up 28% year-on-year to a record high; but capital expenditure was RMB 12.98 billion, down 24% year-on-year and about 32% quarter-on-quarter.
Tencent Chief Strategy Officer James Mitchell pointed out that in 2024, Tencent's total capital expenditure grew 221% year-on-year, accounting for about 12% of prior revenues. For 2025, Tencent had previously guided for further increases in capex, with capex as a percentage of revenue in the low double-digits. However, actual 2025 capex will be below the prior guidance range, though the amount will be higher than 2024.
Regarding investors' concerns that less "aggressive" capex compared to other companies might cause Tencent to fall behind in the AI application market, Tencent President Liu Chiping stated that all of Tencent’s GPU resources are sufficient for internal use, and the main constraint lies in external cloud service revenue.
He also emphasized that the new capex guidance does not reflect a change in Tencent’s AI strategy nor a revision of future token consumption expectations, but is instead due to changes in AI chip supply conditions.
Meanwhile, Liu Chiping disclosed for the first time that the cloud business has already achieved profitability this year. However, he also stated that changes in AI chip supply have affected cloud service revenue to a certain extent.
This year, "cloud" is undoubtedly the Tencent business standing in the spotlight—not only because the surge in AI applications is driving cloud vendors’ strong growth, but also because Tencent Cloud has become the central hub for major AI products on both the B-side and C-side for the company.
The financial report shows that in the third quarter, Tencent’s enterprise services revenue grew by double digits year-on-year, thanks to cloud service revenue growth (including increased demand from business customers for AI-related services) and increased technology service fees from merchants, driven by the expansion in WeChat Shop transaction volume.
Although the commercialization of C-side AI native applications hasn’t yet begun, Tencent’s commitment to Yuanbao is unquestionable.
This year, Tencent's strategy for Yuanbao has shifted from advancing as a standalone product to deep integration with Tencent ecosystem applications.
Yuanbao has already been connected with over 10 Tencent apps, including Tencent Meeting, Tencent Docs, WeChat, Tencent Video, QQ Music, etc. In September, a key milestone was reached: Yuanbao was fully launched in public accounts and Video Account comment sections, allowing users to interact with @Yuanbao.
Tencent’s data shows that Yuanbao's daily active users are now among the top three domestic AI native applications, with the single-day question volume reaching the total monthly level at the start of the year.
While rapid scenario-based deployment is being pushed forward, Tencent continues to strengthen its AI infrastructure. The Hunyuan large model's capabilities are improving continuously. In September, Tencent open-sourced its Hunyuan Image 3.0 model, which ranked first in blind testing on the international authoritative LMArena image generation evaluation.
Up to now, the total number of Hunyuan image and video derivative models has reached 3,500, with over three million downloads for the 3D series model community, demonstrating its high activity in both industry applications and developer ecosystems.
Tencent Chairman of the Board and CEO Pony Ma stated that strategic investment in AI not only helps Tencent in advertisement targeting and gaming user engagement, but also brings efficiency improvements to fields such as programming, gaming, and video production.
Reflected in the financial report, all of Tencent's core businesses are showing a sustained positive trend, with major segments achieving double-digit growth in revenue.
As one of Tencent’s pillar businesses, gaming has performed exceptionally well this year, maintaining growth above 20% for the fourth consecutive quarter and completely emerging from the shadows of the previous two years.
Specifically, in the third quarter, Tencent's gaming revenue reached RMB 63.6 billion, an increase of 22.8% year-on-year; local market gaming revenue was RMB 42.8 billion, up 15% year-on-year; international gaming revenue was RMB 20.8 billion, a substantial jump of 43% year-on-year, marking the first time revenue surpassed RMB 20 billion.
Tencent indicated in the report that the strong performance in the international gaming market was mainly due to increased revenue from Supercell’s games, contributions from recently acquired gaming studios, and sales of newly released PC and console games such as "Dying Light: The Beast Within."
Guosen Securities analysts believe that Tencent's prior overseas investment in game studios can now continually empower overseas shooters and GAAS (game monetization) experience, and that Tencent’s overseas gaming business is expected to maintain its excellent performance next year.
Of course, besides gaming, Tencent’s advertising revenue has also kept a high growth rate. In the third quarter of this year, boosted by AI and the WeChat Business Ecosystem, Tencent’s marketing service revenue was RMB 36.24 billion, an increase of 21% year-on-year, maintaining double-digit growth for twelve straight quarters, ahead of the industry.
According to the financial report, this growth was due to increased ad impressions, driven by improved user engagement and ad load rates, as well as AI-powered ad targeting boosting eCPM (effective cost per mille). At the same time, Tencent specifically mentioned that ad spending from all major industry advertisers increased in the third quarter.
Reportedly, Tencent Ads has established an "AI-powered integrated business landscape," and the smart delivery product matrix, Tencent Ads AIM+, which was officially disclosed in tandem with the financial report, supports advertisers with automatic targeting, bidding, and placement configuration, and optimizes ad creatives to boost their marketing ROI.
Take Tuyu Games as an example: through Tencent Ads AIM+, their ad infrastructure and spending have grown several times, and the testing cycle for new creatives has been shortened by 50%–70%.
Pony Ma pointed out that as Hunyuan foundational model capabilities continue to improve, Tencent's investments in popularizing Yuanbao and efforts to develop AI agents within WeChat will lead to more positive progress.
Driven by AI, Tencent has truly entered a new expansion cycle.
Risk Warning and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it take into account the individual user’s unique investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their specific circumstances. If you invest based on this, you assume responsibility for the consequences.