Behind a staggering 119% surge in capital expenditure lies Tencent's unwavering commitment to long-term investment in AI technology, prioritizing strategic value over short-term gains. This strategic focus is now translating into tangible growth momentum.

Recently, Tencent Holdings released an interim report that garnered significant market attention. The financial report revealed that total revenue for the first half of the year amounted to 364.526 billion yuan, marking a 14% year-on-year increase. Net profit attributable to shareholders stood at 103.449 billion yuan, up 16% from the previous year. In the second quarter alone, revenue hit 184.5 billion yuan, a 15% year-on-year rise, while operating profit amounted to 69.25 billion yuan, representing an 18% year-on-year increase.

This impressive report card elicited a robust response in the capital market. On the day of the financial report's release, Tencent's share price closed at HK$586, marking a 4.74% increase for the day and setting a new closing high since 2021. Consequently, the company's total market capitalization soared to HK$5.364 trillion.

Collaborative Success Across Three Major Business Segments

Tencent's three core businesses collectively demonstrated steady growth in the first half of 2025. In the second quarter, the value-added services business generated revenue of 91.4 billion yuan, a 16% year-on-year increase, emerging as the primary revenue driver. The marketing services business contributed 35.8 billion yuan in revenue, up 20% year-on-year, achieving a record high. Meanwhile, the financial technology and enterprise services business raked in 55.5 billion yuan in revenue, a 10% year-on-year increase, with enterprise services exhibiting notably faster growth.

Profitability has significantly improved. In the second quarter, Tencent Holdings' gross margin reached 57%, a 4 percentage point increase year-on-year. The operating profit margin, calculated based on non-IFRS standards, climbed to 38%. Abundant cash flow underpins strategic investments – in the first half of the year, the company's net cash flow from operating activities was robust, with free cash flow reaching 43 billion yuan.

Technological Investment Transforms into Commercial Momentum

Tencent invested 20.25 billion yuan in AI research and development in the second quarter, a 17% year-on-year increase. More strikingly, the company's capital expenditure surged 119% year-on-year to 19.11 billion yuan. This strategic investment, unencumbered by short-term profitability concerns, is systematically transforming into robust growth momentum.

The Hunyuan large model system has achieved pivotal breakthroughs. The implementation of art-level 3D generation large models and 3D world generation models has substantially lowered the production threshold for content ecosystems, including games and social media. In terms of toolchains, Tencent Cloud's intelligent agent development platform and the CodeBuddy IDE international version have undergone internal testing, integrating the latest models like GPT-5, thereby constructing full-stack capabilities spanning from model training to application development.

On the user front, the AI product matrix has achieved deep penetration. Tencent's AI assistants, such as Yuanbao, ima, and QQ Browser, combined with fully upgraded AI search and WeChat Mini Program intelligent customer service functions, seamlessly integrate into users' daily lives. WeChat's monthly active accounts reached 1.411 billion, a 3% year-on-year increase, nearing the ceiling of China's total population.

Core Growth Poles Empowered by AI

Tencent Holdings' gaming business stands as one of the biggest beneficiaries of AI technology applications. In the second quarter, the company's total gaming revenue amounted to 59.2 billion yuan, a 22% year-on-year increase, with the international market performing particularly well, generating revenue of 18.8 billion yuan, a 35% year-on-year increase, setting a new record for the fourth consecutive quarter.

AI has yielded substantial results across the entire chain of game development and operation. Following the integration of DeepSeek, Game for Peace introduced an AI star teammate, "Hua Aotian," with long-term memory capabilities. CrossFire leverages AI technology to address the issue of players being misled by false information. The local market also remains strong, with Delta Force Action surpassing 20 million average daily active users in July, ranking among the top five in the industry.

The advertising business has achieved double-digit growth for 11 consecutive quarters. The revolutionary reshaping of the entire advertising delivery chain by AI plays a pivotal role, and the upgraded advertising foundation model has significantly enhanced the advertising effectiveness of platforms like WeChat Video, Mini Programs, and Search. Data indicates that video number and Mini Program marketing revenue increased by approximately 50% year-on-year, while WeChat Search revenue surged by roughly 60% year-on-year.

Export of Digital Ecosystem Standards

Tencent's globalization strategy showcases a unique path anchored in the WeChat ecosystem and technological prowess. Currently, organizations in 92 foreign countries and regions serve global users through WeChat Mini Programs. The launch of Mini Programs like "Triplabo Travel to Korea" and "Uber Global Taxi" underscores the deep penetration of the WeChat ecosystem into global high-frequency scenarios.

Key strides have been made in the globalization of the payment network. In Malaysia, 2.6 million merchants have been connected via DuitNow QR codes, while the upgrade of foreign card services and the establishment of a cross-border payment network offer a seamless financial experience for global users.

Enterprise services have likewise achieved fruitful results in their global expansion. Tencent Cloud serves over 10,000 overseas customers in more than 80 countries and regions, assisting international giants such as GoTo and Charoen Pokphand Group, as well as Chinese enterprises venturing overseas, including Meituan Keeta and Midea, in enhancing their digitalization levels.

Deep Technological Cultivation and Ecosystem Synergy

In response to analysts' queries, Tencent executives outlined a clear development trajectory. The advertising business still holds immense growth potential, hinging on four key variables: click-through rate improvement, traffic growth, increase in revenue per click, and optimization of ad loading rate. Currently, the ad loading rate of video numbers hovers between the low to mid-single digits (3%-6%), significantly lower than peers' rates exceeding 10%.

In the gaming sector, shooting games are deemed a critical growth area. Company executives highlighted that the preference of new-generation players for shooting games and the enhanced experience brought about by technological and graphical advancements render this category with sustained explosive potential. Among the upcoming products, pre-orders for the mobile game Valorant (Va Shou) have surpassed 60 million and will be launched on August 19th.

AI and ecosystem synergy will remain at the heart of Tencent's strategy. Pony Ma emphasized in the financial report, "We continue to invest in and benefit from the AI field." Tencent aims to bolster its multimodal capabilities, strengthen the integration of intelligent agents with the WeChat ecosystem, and position AI as "the best personal assistant for users."

As AI technology becomes deeply embedded in the gaming, advertising, and social ecosystems, serving as the "gene of new businesses," this technological giant is evolving from being an "outstanding performing enterprise" to being a "pivotal force driving the advancement of digital civilization." With the Hunyuan large model's 3D generation capabilities continually pushing boundaries and WeChat Payment connecting millions of merchants in Malaysia, Tencent's global technological confidence is unmistakable.

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