Tencent once again aims for 7 trillion

Author | Huang Yu

Editor | Wang Xiaojun

Tencent, which is making significant investments in AI, has once again reassured investors. After delivering a "battle report" in the second quarter that exceeded market expectations, Tencent's performance in the third quarter has also remained strong.

On November 13, Tencent Holdings ( 00700.HK ) released its third-quarter financial report for 2025, showing that total revenue reached 192.87 billion yuan, a year-on-year increase of 15%, maintaining the same growth rate as the previous quarter; at the same time, Non-IFRS net profit attributable to shareholders soared to 70.55 billion yuan, a year-on-year increase of 18%, far exceeding market expectations.

With Tencent's robust performance recovery and its steadfast investment in AI strategy, the company has also welcomed a revaluation of its value. Guohai Securities' research report stated that based on the SOTP valuation method, it gives Tencent Holdings a total target market value of 6.5 trillion yuan/7.1 trillion HKD for its various businesses in 2026, corresponding to a target price of 773 HKD, maintaining a "buy" rating.

In fact, since the beginning of this year, Tencent's stock price has cumulatively risen nearly 60%, and it once approached the historical highest stock price set in 2021. As of the close on November 13, the total market value reached 6 trillion HKD, and returning to the peak of 7 trillion HKD market value does not seem far off.

While AI is injecting growth momentum into this internet giant, it has distanced itself from this year's hottest and most capital-intensive "instant retail war." Some brokerages believe that Tencent is expected to be the only internet giant listed in China to achieve year-on-year profit growth in the third quarter.

Amid the ongoing AI boom, the focus of external scrutiny on Tencent's financial report undoubtedly falls more on AI.

From the perspective of capital expenditure that demonstrates its commitment to AI investment, Tencent is currently relatively cautious.

The financial report shows that in the third quarter of this year, Tencent's R&D expenditure reached 22.82 billion yuan, a year-on-year increase of 28%, setting a historical high; however, capital expenditure reached 12.98 billion yuan, a year-on-year decrease of 24%, and a quarter-on-quarter decline of about 32%.

Tencent's Chief Strategy Officer, James Mitchell, pointed out that Tencent's total capital expenditure in 2024 is expected to grow by 221% year-on-year, accounting for about 12% of previous revenue. For 2025, Tencent has indicated that it will further increase capital expenditure, with capital expenditure accounting for a low double-digit percentage of revenue. However, the actual capital expenditure for 2025 will be lower than Tencent's previous guidance range, but the amount will be higher than in 2024.

Regarding investors' concerns that capital expenditure not being as "aggressive" as 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 actually sufficient for internal use, and the limiting factor mainly lies in external cloud service revenue.

At the same time, he emphasized that the new capital expenditure guidance does not reflect a change in Tencent's AI strategy, nor is it a change in future token consumption expectations, but rather due to changes in the supply situation of AI chips At the same time, Liu Chiping disclosed for the first time that the cloud business has achieved profitability this year. However, he also stated that changes in AI chip supply have affected cloud service revenue to some extent.

This year, "cloud" is undoubtedly the business that Tencent is spotlighting, not only because the explosion of AI applications has driven strong growth in cloud service performance, but also because Tencent Cloud has simultaneously become the base for Tencent's heavyweight AI products for both B-end and C-end.

The financial report shows that in the third quarter, Tencent's enterprise service revenue grew by more than ten percent year-on-year, benefiting from the revenue growth of cloud services (which includes growth driven by increased demand for AI-related services from enterprise customers) and the growth of merchant technology service fees due to the expansion of transaction volume in WeChat Mini Stores.

Although the commercialization of C-end AI native applications has not yet been prioritized, Tencent's emphasis on Yuanbao is undeniable.

Since the beginning of this year, Tencent's development strategy for Yuanbao has shifted from an independent product advancing alone to a deep integration with Tencent's ecosystem applications.

Yuanbao is now connected with more than 10 applications, including Tencent Meeting, Tencent Docs, WeChat, Tencent Video, and QQ Music. In September, the integration process reached a key milestone: Yuanbao was fully launched in the comment sections of public accounts and video accounts, allowing users to interact through @Yuanbao.

Data provided by Tencent shows that Yuanbao's daily active users have entered the top three of domestic AI native applications, with daily question volume reaching the total monthly level at the beginning of the year.

While the scene-based implementation is rapidly advancing, Tencent continues to strengthen the construction of its AI foundation, with the capabilities of the Hunyuan large model continuously improving. In September, Tencent open-sourced the Hunyuan Image 3.0 model, which achieved first place in blind testing in the text-to-image evaluation of the internationally authoritative list LMArena.

As of now, the total number of Hunyuan image and video derivative models has reached 3,500, and the community download volume of the 3D series models has exceeded 3 million, demonstrating its activity in industrial applications and the developer ecosystem.

Pony Ma, Chairman and CEO of Tencent, stated that strategic investments in AI not only benefit Tencent in areas such as precise advertising targeting and game user engagement but also bring efficiency improvements in programming, gaming, and video production.

Reflected in the financial report, Tencent's core businesses are on a continuous upward trend, with major segments achieving double-digit growth in revenue.

As one of Tencent's pillar businesses, the gaming sector has performed strongly this year, maintaining a growth rate of over 20% for the fourth consecutive quarter, completely emerging from the gloom of the previous two years.

Specifically, in the third quarter, Tencent's gaming revenue reached 63.6 billion yuan, a year-on-year increase of 22.8%. Among them, domestic market gaming revenue was 42.8 billion yuan, a year-on-year increase of 15%; international market gaming revenue was 20.8 billion yuan, a significant year-on-year increase of 43%, also marking the first time revenue has surpassed the 20 billion yuan mark.

Tencent pointed out in the financial report that the impressive performance of international market games is mainly attributed to the revenue growth of games under Supercell, the revenue contribution from recently acquired game studios, and the sales performance of the newly released PC and console game "Dying Light: Stay Human."

Analysts from Guosen Securities believe that Tencent's proactive layout of overseas studios in the early stages can continuously empower overseas markets with shooting game experience and GAAS (game commercialization) experience, and it is expected that Tencent's overseas games will continue to perform excellently next year Of course, in addition to games, Tencent's advertising revenue has also maintained a high growth rate. In the third quarter of this year, driven by AI and the WeChat business ecosystem, Tencent's marketing services revenue reached 36.24 billion yuan, a year-on-year increase of 21%, with double-digit growth sustained for twelve consecutive quarters, leading the industry.

The financial report pointed out that this growth was due to the increase in advertising exposure, which benefited from improved user engagement and ad loading rates, as well as the growth in eCPM (effective cost per thousand impressions) driven by AI-powered ad targeting. At the same time, Tencent specifically mentioned that advertising placements from all major industries increased in the third quarter.

It is reported that Tencent Advertising has built an "AI-enabled holistic operational landscape," with the smart placement product matrix Tencent Advertising AIM+ officially disclosed in the same financial report, supporting advertisers in automatically configuring targeting, bidding, and placements, while optimizing ad creatives to enhance their marketing return on investment.

Taking Tuyu Games as an example, through Tencent Advertising AIM+, its advertising infrastructure quantity and consumption scale achieved several times growth, and the new material testing cycle was shortened by 50%–70%.

Pony Ma pointed out that with the continuous improvement of the mixed Yuan model capabilities, Tencent's investment in promoting the popularization of Yuanbao and efforts to develop AI agent capabilities within WeChat will bring more positive progress.

Driven by AI, Tencent has truly ushered in a new expansion cycle