By Sherry Qin

Tencent Holdings reported double-digit growth on its top and bottom lines, extending its recent streak of earnings beats as the technology giant continued AI integration efforts and its core gaming business sustained strong momentum.

The Shenzhen-based company, China's largest by market capitalization, has invested heavily in artificial intelligence for years, developing its own large language model and leveraging AI tools to boost productivity and reduce costs across its various business segments. Its efforts are now paying off, with the company showing strong financial performance in recent quarters.

"Our strategic investments in AI are benefiting us in business areas such as ad targeting and game engagement, as well as in efficiency enhancement areas such as coding, and game and video production," Tencent said Thursday.

The videogame and social-media company delivered a 19% increase in third-quarter net profit to 63.13 billion yuan, equivalent to $8.88 billion, topping market expectations. Its revenue continued steady growth, climbing by a better-than-expected 15% from the previous year.

Citi analysts noted that Tencent's results still came ahead of most estimates despite the market expecting a strong performance for the quarter, positioning Tencent as "the most 'reputable' company with stable/consistent performance."

"The only possible disappointment if any would be the capex," analysts led by Alicia Yap wrote in a note.

The company's capital expenditure declined more than 20% from a year earlier and over 30% sequentially during a period marked by geopolitical volatility and economic uncertainty. Chinese authorities raised security concerns about Nvidia's H20 chips earlier this year and have since urged domestic tech companies to stop using it.

Tencent's bread-and-butter gaming business proved resilient in the third quarter, with revenue from domestic games rising 15% and that from international games surging 43%.

Daily active user numbers of "Delta Force," a first-person shooter game, surpassed 30 million in September, one year after its launch. "Valorant Mobile" has also gained traction among players since its August debut, with Morgan Stanley expecting the game to gross about 5 billion yuan to 6 billion yuan in the first year.

Marketing-services revenue continued to grow, rising 21% thanks to AI-powered advertising-technology upgrades and the continued growth of WeChat-embedded video accounts.

WeChat and Weixin had a combined 1.41 billion monthly active users at the end of September, up 2% from a year earlier.

Shares of the Hong Kong-listed company have risen more than 55% this year as trade tensions between the U.S. and China ease and the AI buzz fuels investors' appetite for tech stocks. Beijing's bid to reduce Chinese reliance on foreign technology has also set a positive policy backdrop after a yearslong regulatory crackdown on internet companies.

Tencent is Bernstein's top long-term pick in the internet sector, with analysts at the U.S. brokerage saying that the market is likely undervaluing the company's potential to drive business improvement through AI.

"The state of internet penetration in China means the AI application layer has the potential to progress more quickly than in the rest of the world," Bernstein said in a note.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

November 13, 2025 06:51 ET (11:51 GMT)

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