--- title: "Tencent Holdings Q1 2026 Earnings Preview: Mixed Yuan Open Source Catalyzes AI Commercialization, Strong Resilience in Game Advertising Growth" type: "News" locale: "en" url: "https://longbridge.com/en/news/286012556.md" description: "Tencent Holdings expects Q1 2026 revenue to be approximately RMB 199.53 billion, a year-on-year increase of 10.8%; adjusted net profit is expected to be around RMB 67.66 billion, a year-on-year increase of 10.3%. Benefiting from the growth of video account advertising, AI optimization, and cloud business, overall performance is expected to show steady growth despite the lack of new game releases. The market is focused on capital expenditure, AI model efficiency, and future profits. Tencent's newly released Hunyuan HY3 Preview model has seen improvements in various capabilities, and it will continue to deepen cooperation on Agent functionalities in the future" datetime: "2026-05-12T00:28:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286012556.md) - [en](https://longbridge.com/en/news/286012556.md) - [zh-HK](https://longbridge.com/zh-HK/news/286012556.md) --- # Tencent Holdings Q1 2026 Earnings Preview: Mixed Yuan Open Source Catalyzes AI Commercialization, Strong Resilience in Game Advertising Growth According to Zhitong Finance APP, Tencent (00700) will announce its first-quarter results for the period ending March 31, 2026, this Wednesday (May 13). Benefiting from the new advertising load on video accounts, efficiency improvements from continuous AI optimization, and growth in cloud business, these positive factors have largely offset the impact of the lack of major new game releases this quarter, some AI-related investments, and the slowdown in game business growth against a high base. Market consensus forecasts indicate that first-quarter revenue is expected to be approximately RMB 199.53 billion, a year-on-year increase of 10.8%; adjusted net profit is expected to be around RMB 67.66 billion, a year-on-year increase of 10.3%. Overall, Tencent's Q1 2026 report is likely to show characteristics of "steady growth combined with accelerated AI." While maintaining competitiveness in core businesses such as gaming and advertising, its AI strategy is gradually transitioning from the investment phase to the commercialization phase. However, the current market still has doubts about three major issues: how intense the capital expenditure will be; whether such a large investment can produce top models; and how much actual profit future capital expenditures can bring—these are the core concerns of the current capital market and directions that investors need to closely track. ## **AI Strategy: Hunyuan HY3 Preview Open Source Agent Capability as a Valuation Deciding Factor** On April 23, Tencent released and open-sourced the Hunyuan HY3 Preview model. This model, led by Yao Shunyu, is the first version after the restructuring of the Hunyuan team. It adopts a fast-slow fusion MoE architecture language model, with a total of 295 billion parameters, 21 billion active parameters, and a context length of 256K. The initially released model is relatively small in size, focusing on practicality and cost-effectiveness, while significantly enhancing Agent capabilities. The new generation model has improved capabilities in chat, coding, intelligent agents, mathematical reasoning, instruction following, and context understanding. Looking ahead, the Guolian Minsheng overseas team believes that the official version of the large parameter model for HY3 is expected to be released later, and cooperation around Agent functions in WeChat is likely to deepen. Considering Tencent's strong advantages in entry points, scenarios, social relationship chains, information/content ecosystems, and mini-program infrastructure, from the current market valuation perspective, whether Tencent can have potential in the Agent track and whether it can produce excellent large models will become the deciding factor for its valuation level. Citi believes that Tencent, relying on its vast WeChat ecosystem, is in a favorable position for monetizing AI applications, with profitability being more resilient compared to its peers. The Hunyuan 3.0 preview version was open-sourced in April, with reasoning efficiency improved by 40% compared to Hunyuan 2.0, and input and output costs reduced by over 50%. The new model and agent-type applications will help drive a revaluation of Tencent's stock price. Citi maintains a "highly confident outperform" rating for Tencent, with a target price of HKD 740. Nomura, on the other hand, believes that Tencent's self-developed model "Hunyuan (HYV)" is currently still lagging behind ByteDance's "Doubao" and Alibaba's "Tongyi Qianwen," mainly due to relatively insufficient investment before 2025. In the second half of 2025, Tencent adjusted its AI strategy, with a new team led by newly recruited former core members of OpenAI, and released Hunyuan 3.0 in April 2026. As a result of significantly increasing investments in AI talent and infrastructure strategy starting in 2026, Tencent's first-quarter operating profit margin (OPM) is expected to decline slightly by 0.5 percentage points year-on-year to 38% ## **Value-Added Services: Steady Growth in Gaming Business, Evergreen and New Games Continue Strong Performance** According to predictions from multiple brokerages, Tencent's gaming business is expected to achieve steady growth in the first quarter of 2026. The market generally anticipates that, benefiting from the strong performance of evergreen and new games such as "Honor of Kings," "Peacekeeper Elite," and "Delta Force," the overall revenue from online games is expected to grow year-on-year by between 10% and 14%. Citi published a research report predicting that Tencent's online gaming revenue will grow by 12.9% year-on-year during this period, mainly benefiting from the strong performance of "Honor of Kings," "Peacekeeper Elite," and "Delta Force." Morgan Stanley expects Tencent's value-added services (VAS) revenue to grow by 6.9% year-on-year in the first quarter of 2026, with online gaming growth at 10%. The domestic and international gaming markets are expected to grow by 8% and 15%, respectively. The slowdown in growth is mainly due to a high base, the later Lunar New Year, and the diminishing effects of overseas studio acquisitions and Supercell's deferred cycle. Citi's research report indicates that Tencent will release its first-quarter results for the 2026 fiscal year on May 13. The firm expects Tencent's gaming and advertising businesses to be stable in the first quarter, predicting total revenue to grow by 9.9% year-on-year to CNY 197.9 billion; non-GAAP net profit is expected to grow by 9.7% year-on-year to CNY 67.2 billion, which is roughly in line with market expectations. Driven by seasonal factors from the Lunar New Year and stable performance from evergreen games, overall online gaming revenue is expected to grow by 11.7% year-on-year to CNY 66.4 billion; among which, domestic and international gaming revenue is expected to grow by 10% and 16%, respectively. Guotai Junan Securities released a research report, estimating that online gaming business revenue will reach CNY 67.9 billion, a year-on-year increase of 14%. Domestic gaming revenue is expected to grow by 13%, with "Delta Force" and the newly launched "King of Rock" performing excellently; overseas gaming is expected to grow by 16%. ## **Online Advertising: Video Accounts and AI Empowerment Drive Accelerated Growth in Advertising Revenue** According to the views of multiple brokerages, Tencent's online advertising business is expected to achieve rapid growth in the first quarter of 2026. The market generally expects that, benefiting from incentivized advertising on video accounts, collaboration with platform e-commerce, and the continuous improvement in the penetration rate of AI-empowered intelligent delivery products (such as automatic configuration targeting, automatic bidding, and automatic delivery), the year-on-year growth rate of advertising revenue is expected to be between 18% and 20%, with an accelerated growth rate compared to the previous quarter. In addition, Tencent's official knowledge Skill and AIM+ products are expected to further drive growth in the advertising business. The overseas team at Guolian Minsheng believes that the penetration rate of the company's intelligent delivery products is still at a low level, and it is expected to help advertisers optimize material generation and improve marketing ROI through automatic configuration targeting, automatic bidding, and automatic delivery in the future. AI empowerment is expected to significantly extend the growth cycle of the advertising business, with the growth center of advertising expected to rise. The Internet team at Huayuan Media points out from a technical perspective that Tencent Advertising has launched the official knowledge Skill "tencent-ads-assistant" and has officially listed it on ClawHub, which is backed by Tencent Advertising's dynamically updated official AI knowledge base. With the launch of the AIM+ product, its penetration rate is expected to continue to improve, thereby driving growth in the advertising business Guotai Junan Securities research report indicates that the marketing services (online advertising) revenue in the first quarter is expected to be 37.6 billion yuan, a year-on-year increase of 18%, with a faster growth rate compared to the previous quarter, mainly benefiting from the promotion of video account incentive advertising and cooperation with platform e-commerce. The revenue from financial technology and enterprise services is expected to be 60.4 billion yuan, a year-on-year increase of 10%, with payment business related to macro consumption; at the same time, the company's product matrix and ecological integration in the OpenClaw field are at a leading position in the country. Citi expects Tencent's advertising revenue during the period to rebound to a year-on-year growth of about 20%, and the growth of financial technology and enterprise services is also accelerating ### Related Stocks - [00700.HK](https://longbridge.com/en/quote/00700.HK.md) - [TCEHY.US](https://longbridge.com/en/quote/TCEHY.US.md) - [GAMR.US](https://longbridge.com/en/quote/GAMR.US.md) - [HERO.US](https://longbridge.com/en/quote/HERO.US.md) - [516010.CN](https://longbridge.com/en/quote/516010.CN.md) - [517770.CN](https://longbridge.com/en/quote/517770.CN.md) - [159869.CN](https://longbridge.com/en/quote/159869.CN.md) - [ESPO.US](https://longbridge.com/en/quote/ESPO.US.md) - [BYTED.NA](https://longbridge.com/en/quote/BYTED.NA.md) - [09988.HK](https://longbridge.com/en/quote/09988.HK.md) - [BABA.US](https://longbridge.com/en/quote/BABA.US.md) - [OpenAI.NA](https://longbridge.com/en/quote/OpenAI.NA.md) - [80700.HK](https://longbridge.com/en/quote/80700.HK.md) - [HTCD.SG](https://longbridge.com/en/quote/HTCD.SG.md) - [TCTZF.US](https://longbridge.com/en/quote/TCTZF.US.md) - [89988.HK](https://longbridge.com/en/quote/89988.HK.md) - [HBBD.SG](https://longbridge.com/en/quote/HBBD.SG.md) ## Related News & Research - [Layoffs Hit ‘Project Ethos’ Team as 2K Unveils New Concept Art, Details for Game](https://longbridge.com/en/news/285594923.md) - [Super League Enterprise Finalizes Misfits Ads Division Acquisition](https://longbridge.com/en/news/285389627.md) - [Supercell acquires Metacore, Tencent expands its presence in the global casual gaming market](https://longbridge.com/en/news/285679017.md) - [Discord launches Nitro Rewards, giving subscribers access to the base tier of Xbox Game Pass for no extra cost](https://longbridge.com/en/news/285947501.md) - [Small Games, Big Hype: GAMIVO Releases New Report on the Rising Popularity of Simple Games](https://longbridge.com/en/news/285972818.md)