--- title: "Behind Tencent's financial report is everyone's anxiety" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39344882.md" description: "Tencent 4Q25 Review: The market no longer rewards stability alone, but is starting to ask what the AI story is? $TENCENT(700.HK) Tencent's earnings are of course stable, so stable that they match market expectations exactly, with no surprises. Fourth-quarter revenue was 194.4 billion yuan, up 13% year-on-year, adjusted operating profit was 69.5 billion, up 17%, advertising and gaming were not bad, even slightly strong. But the most important focus has long been not whether the earnings are good, but whether Tencent has transformed from a high-quality cash cow into an AI-revalued asset? So since you want an AI story, let me tell you..." datetime: "2026-03-18T15:02:57.000Z" locales: - [en](https://longbridge.com/en/topics/39344882.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39344882.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39344882.md) author: "[25号观察](https://longbridge.com/en/profiles/13849785.md)" --- # Behind Tencent's financial report is everyone's anxiety Tencent 4Q25 Review: The Market No Longer Rewards Stability Alone, But Begins to Ask: What's the AI Story? [$Tencent Holdings (00700.HK)$](https://www.futunn.com/en/stock/00700-HK) Tencent's performance is, of course, stable—so stable it matches market expectations exactly, with no surprises. Fourth-quarter revenue was 194.4 billion yuan, up 13% year-over-year; adjusted operating profit was 69.5 billion yuan, up 17%. Both advertising and gaming performed well, even leaning towards strong. **But the most important focus has long ceased to be whether the performance is good; it's whether Tencent has transformed from a high-quality cash cow into an AI-revalued asset.** Well, since you want an AI story, I'll tell one. So, Pony Ma spent the first few minutes of his opening remarks repeatedly mentioning AI. In the business and strategy section, Martin talked about AI throughout the entire segment. By the Q&A session, analysts' questions all revolved around AI. Tencent's earnings call resembled an AI defense session, with management trying to convince everyone—Tencent is the internet company that benefits most from AI, you have to believe it! **Behind these earnings lies the anxiety of everyone.** Management is anxious: not investing in AI might mean missing the era; investing requires proving it's an expensive expenditure with appropriate ROI. Investors are anxious: should Tencent continue to be valued as a stable giant, or should it start receiving an AI platform premium? The industry is anxious: the AI stance of internet giants determines the direction and pace of the entire industry chain. # 1、 **The company emphasized that it plans to reduce share repurchases this year and use the funds for AI investments.** This is a signal of a full-scale acceleration of its AI strategy. But questions immediately follow. If it truly embraces AI and ramps up investment, some people aren't happy: how can you reduce shareholder returns? They grumbled and sold their shares. Tencent's US ADR opened down 4% at one point, wiping out about 170 billion yuan in market cap, equivalent to two years of Tencent's capex investment. These people want both AI and shareholder returns—there's no such cheap deal. Tencent's 2025 capital expenditure was 79.2 billion yuan; this year it's estimated to be over 100 billion yuan. But the issue isn't whether capex is high; it's whether this money is defensive or offensive. If it's just to avoid falling behind, it will pressure profits, valuations, and sentiment. But if it starts to translate into advertising efficiency, cloud demand, and WeChat ecosystem value, then it's not a cost but a source of valuation premium. This is the real anxiety of Tencent's management: over the past decade-plus, Tencent has excelled at turning traffic, social networking, content, and gaming into an extremely efficient profit machine. **But in the AI era, the market no longer rewards just earning steadily; it begins to ask—can you transform the old empire into a new AI platform?** This is difficult for Tencent, and difficult for investors too. # 2、 **How much does AI actually help Tencent's business?** First, look at advertising. **The company explicitly mentioned that AI has enhanced ad targeting capabilities.** Fourth-quarter ad revenue grew 17% year-over-year, and management noted that first-quarter ad growth is continuing to improve sequentially. In the past, the market understood Tencent's advertising more as video account loading rates having room to grow and WeChat traffic not yet fully tapped. But if part of the growth now starts coming from AI improving recommendations, increasing conversions, and enhancing ROI, then the logic of Tencent's advertising changes. It's no longer just inventory release; it begins to become efficiency upgrade—that's the AI story you want. Next, look at gaming. This earnings report still shows resilience from evergreen titles + contributions from new games + overseas acceleration, with multiple areas thriving. Tencent has actually made it quite clear in its annual report: increasing AI investment aims to achieve sustained returns by boosting game production efficiency and extending game lifecycles. The logic behind this is that AI can improve material production, event operations, user segmentation, matchmaking recommendations, anti-cheat, and customer service efficiency, even reducing trial-and-error costs in some content production stages. It might not immediately create a blockbuster new game, but it can make Tencent better at turning a good game into an evergreen product. **But without AI, would it affect Tencent's fundamentals?** Actually, no. Advertising, gaming, payments, and the social ecosystem are themselves sufficient to form a high-quality profit machine. AI, at least at this stage, is not a lifeline for Tencent but merely the icing on the cake. It doesn't determine whether Tencent can make money, but whether Tencent can still be viewed with a higher valuation. # 3、 **So ultimately, what kind of Tencent are we really expecting?** If we're just standing in the old cycle, of course we want Tencent to continue being that most comfortable asset: stable gaming, strong advertising, good profit margins, generous share repurchases, and consistent annual free cash flow release. Such a Tencent is safe, predictable, and suitable for large funds to hold for the long term. But Mr. Market today is too harsh, demanding more and more from top students; scoring 90 is no longer enough. What everyone truly seems to expect today is a more complex and even contradictory Tencent: **one that retains the certainty of a cash cow, grows the imagination of an AI platform, and ideally can effectively fend off ByteDance's attacks**. This is the essence of all the anxiety and the true core of these earnings. **This is a very harsh, even somewhat greedy demand.** You want it to continue being as steady as an old-timer, yet as bold in investment as a young gun; you want it to maintain high shareholder returns, yet commit hundreds of billions in capex to seize the next platform-level opportunity; you want it to prove AI has a story, yet hope this story can turn into revenue as soon as next quarter. 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