Tencent Gaming Growth Powers Q4 Earnings Beat As Tech Giant Touts AI Push
Tencent Holdings (TCEHY) Wednesday reported fourth-quarter results that beat expectations, powered by accelerating growth in gaming revenue. The company also touted the growth of its AI business, which has contributed to a strong start to the year for Tencent stock.
The China-based messaging and gaming company reported adjusted earnings of 5.91 yuan per share on revenue of 172.4 billion yuan, or $23.9 billion. Analysts expected Tencent to report earnings of 5.66 yuan per share on revenue of 168.1 billion yuan, according to FactSet. Sales climbed 11% year over year in local currency while adjusted earnings per share increased 33%.
Tencent is the parent company of the Chinese super-app WeChat that is widely used in the country. It also is one of the world's largest video game companies. The tech giant is developing AI tools, such as open source 3D visual generation tools the company revealed on Tuesday ahead of its earnings report.
Tencent stock, which trades over the counter in the U.S., was not yet active before the open on the stock market today. Tencent stock is listed in Hong Kong.
↑ X Nasdaq Leads Market Slide; Mueller Water Products, T-Mobile, EverQuote In FocusTencent Gaming Revenue Accelerates
Revenue from Tencent's international gaming division increased 15% year-over-year to 16 billion yuan, or $2.21 billion. Domestic gaming revenue rose 23% to 33.2 billion yuan, or $4.6 billion. Growth for both divisions accelerated from 9% and 14%, respectively, in the third quarter.
Marketing services revenue climbed 17% year-over-year to 35 billion yuan, or $4.84 billion. That was roughly even with the growth rate for Tencent's third quarter.
Tencent late last month released its Hunyuan Turbo S AI model it said can answer queries faster than the DeepSeek models that rattled U.S. markets in late January. But Tencent has also reportedly integrated DeepSeek models to power some features on WeChat.
Tencent is competing with other Chinese tech giants and startups such as DeepSeek to build the top AI model in the country. Alibaba (BABA) and Baidu (BIDU) each revealed new models and updated AI agents in recent weeks. An AI chatbot tool called Manus AI that was developed by a Chinese startup is capturing attention in the tech world as well, though it is still in a limited preview phase.
Tencent pledged to keep up its AI push in its earnings news release Wednesday.
"As the capabilities and benefits of AI become clearer, we have stepped up our AI investments to meet our internal business needs, train foundation models and support surging demand for inference we are experiencing from our users," the company said. "We intend to further increase our capital expenditures in 2025 and believe these AI investments will generate good economic returns and value."
Tencent Stock Up 29.5% In 2025
Tencent stock fell a fraction to 69.46 Tuesday but is up nearly 30% overall this year, hitting their highest levels since 2021. Shares are extended from a 61.60 cup-base buy point.
The Relative Strength rating of 96 out a best-possible 99 indicates that TCEHY stock is outperforming 96% of all stocks.
Tencent shares, meanwhile, show a 21-day ATR of 2.8%.
The average true range is a metric available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's movement. Stocks that tend to make large jumps or dives in daily action have a high ATR. Stocks that tend to make more gradual moves have lower ATRs. In a volatile market, IBD suggests stocks with ATRs of 3 or below.
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