Tencent has made a comeback. In fact, it’s one of the most frequently watched stocks in Hong Kong, especially with AI.
Today, shares have climbed close to 60% over the past year, making it an outperformer in the Hang Seng index.
After China’s hard tech clampdown and weak demand, this tech giant is showing strong growth again.
Here’s 7 big insights you need to know before you buy Tencent.
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1. Strong earnings beat the market expectations
In its latest 2Q2025 results, Tencent grew:
- Revenues by 13% to CNY180 billion
- Net profits by 14% to CNY48 billion
That’s impressive. Both revenue and net profit have beat market expectations and this was driven by how Tencent used AI to power its core business segments across gaming, advertising and e-commerce.
Perhaps we can say, Tencent is finally back on track after years of unfavorable regulatory and market environment.
2. Gaming is core engine of growth
Gaming remains Tencent’s crown jewel. And still dominates China’s gaming market. What’s more, Tencent’s value-added services revenue, which includes gaming, jumped 16% to CNY91 billion in Q2.
What’s more, domestic hits like “Honor of Kings” and “PUBG Mobile” stayed resilient. Meanwhile, Tencent saw successes from new releases like “Delta Force”, which added fresh excitement.
Meanwhile, its international games were even more impressive. Revenues surged 35% to CNY19 billion. This marked the fourth consecutive quarter of record highs for overseas gaming revenue.
3. Tencent’s strong advertising reflects improving outlook
Here’s the kicker: Tencent’s Marketing services revenue accelerated 20% to CNY36 billion in Q2. This growth was directly driven by AI improvements to Tencent’s advertising platform.
The company also upgraded its advertising model using AI. This led to better ad targeting and higher click-through rates across ITS WeChat, Video Accounts, and Mini Programs.
Tencent’s AI advertising technology is still in early stages. This suggests more room for growth ahead.
More importantly, this also shows a brighter China consumption outlook. First things first, an advertiser’s budget is a leading indicator of an economy.
Advertisers will spend more if they know consumers will spend more down the road. They will cut back the budget if they expect gloomy days ahead. In fact, Tencent’s advertising revenues have grown, which reflects a more optimistic outlook in the days ahead.
4. WeChat is still Tencent’s AI Super App
Today, WeChat has ~1.4 billion monthly users, which is also Tencent’s strongest moat. Here’s the thing: with the launch of Yuanbao, an AI-native app within WeChat, it shows how Tencent is building AI into its ecosystem.
In my view, with more AI features this leads users to spend more time in the app – driving engagement and ultimately boosting advertising revenues.
5. AI is the new battleground
Using AI is no longer an option. In fact, Tencent is using AI to power its games – “Honor of Kings” and “Peacekeeper Elite” uses AI to create more personalized gaming experiences.
This also helps reduce gaming costs and accelerate game development, which allows Tencent to launch more games faster and cheaper than its peers.
Meanwhile, Tencent Cloud is benefiting from the AI boom. Its enterprise customers are paying for GPU computing power and AI tools.
What’s more, the tech giant offers end-to-end AI solutions for businesses. This includes the TI-ONE machine learning platform and industry-specific AI applications.
As Tencent expands globally, it recently announced plans to invest $150 million in a data centre in Saudi Arabia. A new data centre in Japan is also under construction.
6. FinTech and Cloud show steady progress
Tencent’s FinTech & Business Services revenue grew 10% to CNY55.5 billion. The growth came from higher revenues in consumer loans, commercial payments, and wealth management.
Cloud revenue growth is accelerating compared to previous quarters. As mentioned earlier, its enterprise customers are increasingly demanding AI-related services.
This includes GPU rental and API token usage through Tencent Cloud.
7. Tencent’s risks remain – but manageable
In my view, I’d still watch for Tencent’s risks.
For one, even though Tencent mainly relies on its domestic market, current US-China tensions could impact Tencent’s overseas sales. Which also brings me to my next point…
A China slowdown. This could impact both Tencent’s gaming and advertising revenues, especially with a much weaker consumer spending.
What’s more, China could resume its aggressive tech clampdown and tightened regulations just like in 2021. In my view, this is the most significant risk that could hit Tencent hard.
However, given China’s sluggish growth, it is that new policies will emerge to hinder Tencent’s growth momentum in the near term.
And lastly, domestic competition. China’s “Involution” could set a wave of new entrants into the gaming market.
For instance, Meituan’s recent financial results revealed a weak consumer market in China with little signs of cooling in a price war amongst companies.
That said, with Tencent’s massive social ecosystem, evergreen gaming titles, and expanding AI capabilities, Tencent’s fundamentals remain resilient.
My final thoughts
Tencent’s stock has been one of Hong Kong’s best performers in 2025. Shares have outperformed the broader Hang Seng Index.
At one point, its shares hit a peak of HK$621 in August 2025, its highest level since 2021. This reflects a remarkable recovery from the lows of 2022.
For long-term investors, this rally also signals strong confidence in Tencent’s AI strategy.
