--- title: "Understanding the Market | Tencent Holdings opened over 3% lower after earnings, with increased AI investments driving up capital expenditures and negative free cash flow for the quarter" type: "News" locale: "en" url: "https://longbridge.com/en/news/295729335.md" description: "Tencent Holdings opened over 3% lower after earnings, and as of the time of writing, it was down 3.29% at HKD 446.4, with a transaction volume of HKD 697 million. On the news front, on August 12, Tencent Holdings released its Q2 2026 financial report. In the second quarter, Tencent's revenue was CNY 204.785 billion, a year-on-year increase of 11% and a quarter-on-quarter increase of 4%; net profit increased by 0.7% year-on-year to CNY 56 billion, which was below market expectations; Non-IFRS operating profit was CNY 75.636 billion, a year-on-year increase of 9% and flat quarter-on-quarter. In the first half of this year, Tencent's revenue was CNY 401.243 billion, a year-on-year increase of 10%; Non-IFRS operating profit was CNY 151.263 billion, a year-on-year increase of 9%. It is worth noting that the initial investment in AI infrastructure has \"smashed\" cash flow into negative territory. Tencent's capital expenditure in the second quarter reached CNY 52.8 billion, an increase of 65% from CNY 31.9 billion in the first quarter; free cash flow turned negative to -CNY 13.8 billion, marking the first time since 2005 that Tencent has reported negative free cash flow. The company stated that excluding the prepayment for computing power of CNY 37.6 billion, net cash decreased from CNY 146.9 billion in the first quarter to CNY 58.1 billion" datetime: "2026-08-13T01:28:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295729335.md) - [en](https://longbridge.com/en/news/295729335.md) - [zh-HK](https://longbridge.com/zh-HK/news/295729335.md) --- # Understanding the Market | Tencent Holdings opened over 3% lower after earnings, with increased AI investments driving up capital expenditures and negative free cash flow for the quarter According to Zhitong Finance APP, Tencent Holdings (00700) opened over 3% lower after its earnings report, and as of the time of writing, it has dropped 3.29% to HKD 446.4, with a transaction volume of HKD 697 million. On the news front, on August 12, Tencent Holdings released its financial report for the second quarter of 2026. In the second quarter, Tencent's revenue was RMB 204.785 billion, a year-on-year increase of 11% and a quarter-on-quarter increase of 4%; net profit increased by 0.7% year-on-year to RMB 56 billion, which was below market expectations; Non-IFRS operating profit was RMB 75.636 billion, a year-on-year increase of 9% and flat compared to the previous quarter. In the first half of this year, Tencent's revenue was RMB 401.243 billion, a year-on-year increase of 10%; Non-IFRS operating profit was RMB 151.263 billion, a year-on-year increase of 9%. It is worth noting that the initial investment in AI infrastructure has "smashed" cash flow into negative territory. Tencent's capital expenditure in the second quarter reached RMB 52.8 billion, an increase of 65% compared to RMB 31.9 billion in the first quarter; free cash flow turned negative to RMB -13.8 billion, marking the first time since 2005 that Tencent has reported negative free cash flow. The company stated that if excluding the prepayment for computing power of RMB 37.6 billion, net cash decreased from RMB 146.9 billion in the first quarter to RMB 58.1 billion ### Related Stocks - [TCEHY.US](https://longbridge.com/en/quote/TCEHY.US.md) - [TCTZF.US](https://longbridge.com/en/quote/TCTZF.US.md) - [00700.HK](https://longbridge.com/en/quote/00700.HK.md) - [80700.HK](https://longbridge.com/en/quote/80700.HK.md) - [HTCD.SG](https://longbridge.com/en/quote/HTCD.SG.md) ## Related News & Research - [Another AI lab is burning through cash as Tencent earnings rise](https://longbridge.com/en/news/295641594.md) - [AI startup Manus to resume independent operations as deal with Meta unwinds](https://longbridge.com/en/news/295555892.md) - [How Cursor recruits elite AI engineers when huge salaries aren't enough](https://longbridge.com/en/news/295332350.md) - [The dream of serving ads to AI agents has hit a snag](https://longbridge.com/en/news/295689957.md) - [These 40-something founders say they have something the AI kids don't](https://longbridge.com/en/news/295385596.md)