Tencent's First-Quarter Net Profit Likely Rose 18% -- Earnings Preview

Dow Jones
05/11
 

By Sherry Qin

 

Tencent Holdings is scheduled to report first-quarter results on Wednesday. Here's what you need to know:

 

NET PROFIT FORECAST: The Chinese videogame and social-media company's quarterly net profit likely rose 18% to 56.56 billion yuan, equivalent to US$8.32 billion, according to the consensus estimate from a FactSet poll of 9 analysts.

 

REVENUE FORECAST: First-quarter revenue likely rose 11% 199.03 billion yuan, thanks to strong gaming revenue during the Lunar New Year holiday and steady performance from evergreen franchises.

 

Tencent's shares fell 19% in the first quarter, taking their year-to-date losses to 22%. The company, which has so far focused on leveraging AI to boost productivity and reduce costs across various businesses, plans to more than double its AI investment this year to stay ahead in China's AI race. Tecent's aggressive capital spending plan has raised market concerns about slower profit growth after it delivered five straight quarters of double-digit growth in both revenue and profit.

 

WHAT TO WATCH:

-- After establishing a new AI division and hiring top talentsin the industry, Tencent released a preview its latest large language model, Hy3, last month, claiming a 40% improvement in inference efficiency with competitive pricing. Citi thinks the latest AI-model launch is "an important milestone" given its immediate integration into a broad range of Tencent products. Investors should pay attention to management's updates on Tencent's AI strategy and upcoming AI-product launches.

-- As Tencent enters a period of higher investment, the tech giant could post mid- to high-single digit operating-profit growth in 2026, Bernstein estimates. However, over the longer term, its ecosystem remains one of the most complete venues for agentic AI services to create value and monetize through ads or mini programs, Bernstein analysts noted.

-- Although Tencent lags Chinese competitors like ByteDance and Alibaba Group in foundation-model capabilities, analysts broadly think the Weixin operator still has potential in China's AI race. "It has a proven history of entering markets later than industry incumbents and ultimately emerging as a leader," Citi analysts said in a recent note.

 

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

 

(END) Dow Jones Newswires

May 10, 2026 23:52 ET (03:52 GMT)

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