--- title: "TCEHY: Time to Ditch the Boomer Vibe, Turn Up the Heat on AI!---" type: "Topics" locale: "zh-HK" url: "https://longbridge.com/zh-HK/topics/39341038.md" description: "After the Hong Kong close on Mar 18 (Beijing time), $TENCENT(00700.HK) released its 2025 Q3 results. Overall, the print was largely in line with no major surprises, though some line items came in slightly off expectations.Against the backdrop of the current AI transformation window, management’s guidance on this year’s investment and growth matters more than the reported quarter. This will be more critical for mid-term valuation.Specifically: 1) Games delivered and are expected to remain the core growth driver this year. The current product cycle is strong, with new titles performing and evergreen franchises supporting durability. Q4 revenue rose 21%..." datetime: "2026-03-18T13:49:01.000Z" locales: - [en](https://longbridge.com/en/topics/39341038.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39341038.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39341038.md) author: "[Dolphin Research](https://longbridge.com/zh-HK/news/dolphin.md)" --- > 支持的語言: [English](https://longbridge.com/en/topics/39341038.md) | [简体中文](https://longbridge.com/zh-CN/topics/39341038.md) # TCEHY: Time to Ditch the Boomer Vibe, Turn Up the Heat on AI!--- After the Hong Kong close on Mar 18 Beijing time, $TENCENT(00700.HK) posted Q4 2025 results. Overall the print was largely uneventful, with some minor variances vs. expectations at the line-item level. In the current AI transition window, management's guidance on 2026 investment and growth matters more for medium-term valuation than the quarterly numbers themselves. Specifically. Key points follow. **1\. Games delivered; likely the core growth engine in 2026:** The product cycle remains strong, with new titles contributing and evergreen franchises sustaining growth. Q4 revenue rose 21% YoY, with domestic up 15% and overseas up 32%. As there were no major domestic launches in Q4, growth locally was driven by newer titles such as 'Delta Action' and the 'Valorant' franchise, alongside evergreen hits like 'Peacekeeper Elite'. Overseas performance continued to rely on Supercell and 'PUBG MOBILE'. On deferred revenue, value-added services (VAS) gross billings fell 10% QoQ in Q4, a larger drop than seasonally typical. Beyond slower growth in music subs and a drag from video memberships, game billings themselves appeared broadly normal. Tencent's games performed fine over the Lunar New Year. 'Peacekeeper Elite' was softer in Q4 but rebounded during the holiday. Two heavyweight new titles, 'Kingdom of Rock' and 'Honor of Kings: World', are slated for 1H and should quickly step in. **2\. Ads cooled, with inventory still to unlock:** Q4 ad revenue grew 18% YoY, but the pace decelerated by 3pct QoQ. Beyond a small high-base effect, weakness in the consumer backdrop likely weighed on growth. Based on Dolphin Research's checks, video accounts, mini-games, search, and Tencent Music ads held up in Q4, while WeChat official accounts declined more notably. Media ads on QQ, Sogou, and Tencent News remained a drag. That said, ad load on video accounts is still low at ~4–5%, with a deliberately measured ramp. Near term, growth depends on AI-driven gains in recommendation efficiency, while mid- to long-term upside can come from releasing more inventory. **3\. Fintech recovery is slow; pure compute leasing is not preferred:** Fintech and enterprise services combined grew 8% YoY, roughly in line with expectations. Within this, enterprise services rose 22% YoY (incl. WeChat Shops commissions), implying fintech grew only in the low to mid-single digits. Compared with prior quarters, there is no clear sign of sustained recovery. Within enterprise services, Tencent Cloud revenue likely grew steadily at 10–20% YoY and did not mirror the current boom in AI compute demand. The core reason: with limited compute supply, Tencent prioritizes internal needs and is not keen on pure GPU leasing unless agency customers have explicit requirements. This keeps headline growth in check while preserving strategic flexibility. **4\. Cost optimization, higher opex:** The margin uptrend remains intact, with OP margin up 200bps YoY. However, promotion spend for AI products such as Yuanbao was visible this quarter, with selling expenses up 44% YoY and +RMB 1.5bn QoQ. Apart from some new game marketing, spending was largely for Yuanbao user acquisition, implying even higher selling expenses in Q1. Other opex increases were driven by AI-related server costs and R&D personnel. Overall opex ratio rose 50bps YoY but was offset by better gross margin. GPM improved across all three major segments, helped by a higher mix of self-developed games (lower revenue sharing) and a larger contribution from video-account ads. **6\. More investment may compress shareholder returns:** On cash flow and capital allocation, Dolphin Research focuses on capex and buybacks. Net cash stood at RMB 107.1bn in Q4 (cash + ST investments less ST borrowings and notes payable), up by nearly RMB 5bn QoQ. Capex was RMB 19.6bn in Q4, up QoQ, but actual cash outflow was RMB 22.4bn, indicating prepayments. Even by cash outflow, full-year 2025 capex was under RMB 90bn, implying a meaningful budget step-up this year. Q4 buybacks totaled HKD 19.6bn, with FY at HKD 77.2bn. The company also announced a dividend of HKD 5.3 per share (est. HKD 48bn, +18% YoY). If incremental cash this year is directed to AI investments (domestic and overseas compute deployment, broader product/model development), buybacks may remain constrained. Potential shareholder yield could fall below ~2.5%. **7\. Full financials at a glance** **Dolphin Research View** Tencent's share price has corrected sharply, now trading around 13–14x P/E, near the historical floor. The pullback is less about the quarter and more about fears that AI or peers could dilute future growth. A routine print alone is unlikely to lift the stock. In this urgent AI race window, investors will focus on management's strategic roadmap and how it plans to close the AI gap. That matters more than static quarterly metrics. Earlier this month, Tencent launched multiple 'Lobster' products in one go, underscoring urgency after Yuanbao lost ground during the Spring Festival campaign. The rushed features are not perfect, but the shift in tone is critical and necessary. WeChat's entry point still appears unshakeable even as AI-native apps proliferate. However, rapid industry shifts are a reminder that no one can be 100% certain of sitting still atop the throne. From this lens, **Dolphin Research prefers Tencent to prioritize capex over shareholder returns; management is unlikely to spend like Meta, avoiding unnecessary waste**. Prudence in prior quarters (capex at ~10% of revenue, below top global tech peers) was not purely voluntary. We also see signs of supply easing via policy, domestic ecosystems, and overseas data center deployment. These factors should gradually widen the investment aperture. **In the near to mid term, the game cycle and ad inventory release provide twin growth drivers that can underwrite higher investment.** Given momentum and the scale benefits of the model and ecosystem, efficiency gains remain achievable. This should support AI and biz. expansion while keeping cash flow stable. **Detailed analysis follows** **I. WeChat ecosystem steady** WeChat MAUs reached 1.418bn in Q4, a net add of 4mn QoQ, indicating steady but slower growth. QQ continues to decline, with little to add. ![图表, 折线图描述已自动生成](https://pub.pbkrs.com/uploads/2026/0fe3eddc8148510453b5fbf9ff001f74?x-oss-process=style/lg) ![图片包含 图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/ed2e91c70b75d5414375b870661f22ad?x-oss-process=style/lg) On AI chatbots, Yuanbao downloads rebounded early this year on marketing. But Qwen advanced rapidly, leveraging scenarios such as food-delivery coupons, and surpassed Yuanbao in users after the holiday. Doubao remains a leader, with the Spring Gala sponsorship boosting traffic. Competitive intensity in AI assistants is clearly rising. Tencent is now building more Agent and OpenClaw-style products around WeChat/QQ entry points. This aligns with our prior view: while Yuanbao remains a key AI product, its medium- to long-term role is more of a testbed. Once products mature, they will inevitably integrate with WeChat/QQ. The core tenet is to infuse AI throughout the existing ecosystem so users can invoke AI services on demand. Q4 VAS paying users rose by 2mn QoQ to 267mn. The increment was driven mainly by Tencent Music (+1.7mn), while video membership numbers were undisclosed. Third-party data (QM) show long-form video user engagement is 'dismal'. This remains a structural headwind for video memberships. ![图表, 条形图描述已自动生成](https://pub.pbkrs.com/uploads/2026/4ba006090a23017b61fef1a289e58111?x-oss-process=style/lg) ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/b737e0ef6a33d52a8653d5a70e229f25?x-oss-process=style/lg) **II. Games met expectations; still the growth pillar in 2026** Q4 online games revenue was RMB 59.3bn (+21% YoY), with domestic +15% and overseas +32% (FX tailwind ~1pct). The mix remained favorable. ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/8ff9fcd5baba75cba0c30bbf91890c68?x-oss-process=style/lg) With no major launches in the quarter, domestic growth came from titles released over the past year such as 'Valorant Mobile', 'Delta Action', and 'Wuthering Waves'. For a top publisher like Tencent, new-title pipelines are no longer the sole driver of revenue swings. Well-operated legacy titles can contribute increments comparable to a mid-sized new launch. For instance, 'Teamfight Tactics' returned to the iOS top-3 by billings in Nov–Dec. 'Peacekeeper Elite' weakened in Q4 (ranking down three spots) but rebounded over the Lunar New Year after the Dunhuang map update, with peak DAU hitting records. Execution on content updates remains a key lever. Billings inferred from deferred revenue offer a more forward-looking gauge of true demand. Q4 VAS billings fell 10% QoQ, a larger drop than usual seasonality. Aside from slower music subs and a drag from video memberships, game billings looked normal. We see no major red flags in core demand. On pipeline, Tencent remains well stocked. 'Assault Fire: Future' launched early this year with average results. Already slated 'Kingdom of Rock: World' and 'Honor of Kings: World' should add meaningful billings from Q2. Titles like 'Link Click', 'Evolution Out of Control', and 'Chess of Kings' are reserved for 2026. ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/e11e616fbd96101666911c3b58d7d532?x-oss-process=style/lg) ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/5b1aab5916c4b67d5e4cfa845f13d08e?x-oss-process=style/lg) **III. Ads slightly decelerated, but room remains** The consumption environment stayed weak in Q4. Tencent ads still grew ~18% YoY, modestly below BBG consensus, and some houses have trimmed ad forecasts given soft demand. ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/39748a1a6c0a06957312dcc54af84509?x-oss-process=style/lg) Near term, AI-led gains in recommendation and conversion can support high growth for video-account and search ads at low ad loads. To sustain elevated growth longer term, inventory release will likely be required. **IV. Weak consumption; fintech's recovery is slow** Fintech & Biz Services rose ~8% YoY in Q4, decelerating QoQ. Within this, enterprise services grew 22% YoY (incl. WeChat Shops commissions), implying fintech only delivered low to mid-single digit growth. ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/9dccd7336ee8a77ccb85138a11c112b9?x-oss-process=style/lg) **V. Investment gains: FV uplift on investment assets** On investment income (per the pre-2025 definition), we look at 'other gains, net' (incl. investment income) plus share of profits of associates/JVs. Q4 combined investment gains rose QoQ primarily on fair-value gains in financial assets. This offset impairment charges on intangibles at investees. Share of profits recognized in Q4 was ~RMB 6.8bn, down YoY due to a high base from a large one-off gain booked by associates last year. ![图表, 瀑布图描述已自动生成](https://pub.pbkrs.com/uploads/2026/46ae84aa941c731df87ce1af11edcc97?x-oss-process=style/lg) ![图表, 条形图, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/24ea5db93a33a84fa312d77ed31ffa0f?x-oss-process=style/lg) By end-Q4, associates/JV assets totaled RMB 348.7bn, implying an annualized investment return of 7.8%, down QoQ. Volatility remains largely FV-driven. ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/8e7fbeda3f313cdc18a8187203d4be8e?x-oss-process=style/lg) **VI. Steady profit improvement, but investment to weigh** Adj. net profit was RMB 64.7bn in Q4 (+17% YoY), in line. Stripping out share of associates and other items to focus on core OP (= GP − opex), **core OP grew 21% YoY, slightly below expectations** due to higher marketing. Core OPM was 30.4%, up 200bps YoY, sustaining the margin uptrend. Selling expenses rose 44% YoY, with +RMB 1.5bn QoQ largely tied to Yuanbao user acquisition, and Q1 sales spend will likely be higher. Other expense growth centered on AI servers and R&D staff. The overall opex ratio rose 50bps YoY but was offset by GPM expansion. Segment GPMs improved to varying degrees, supported by a higher mix of self-developed games and a larger share from video-account ads. These mix shifts should continue to help margins. ![图表, 条形图, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/24295f47179ddbc40c093de208acf94f?x-oss-process=style/lg) ![图表, 直方图描述已自动生成](https://pub.pbkrs.com/uploads/2026/bea06bdfe03fc1e95cae391c67a893ec?x-oss-process=style/lg) Near to mid term, continued investment may pressure margins. Apple's tax adjustment is positive for VAS GPM, but AI spending will gradually flow into depreciation and compute rental, with near-term R&D headcount costs also higher. Management previously indicated it prefers AI-driven efficiency and revenue growth rather than layoffs, so headcount cuts are unlikely in the near term, with slower net adds instead (Q4 net employees +773, a marked slowdown QoQ). Longer term, overall efficiency gains could support margins. On the other hand, Tencent's diversified businesses and model enable resource reuse and allocation, reducing waste and helping keep margins stable. This flexibility is an advantage during investment cycles. ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/190408c3ed8f665994a20be735c9bc2f?x-oss-process=style/lg) ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/a2017858bc6236ee092ed372b0ddf8c6?x-oss-process=style/lg) Q4 capex was RMB 19.6bn, up QoQ, but prepayments continued as cash outflow exceeded capex, implying equipment not yet delivered. While management remains ROI-focused, three straight quarters of prepayment indicate a supply shortfall on the compute side. ![图表, 瀑布图描述已自动生成](https://pub.pbkrs.com/uploads/2026/1c067cf8fbaca25315fbad464ffad9c3?x-oss-process=style/lg) **VII. Major shareholder selling slowed** On buybacks and disposals. Over the four months since the last report, total shares outstanding fell by a net 39mn. The major shareholder's selling pace stayed similar to last quarter but slower than in prior periods, with avg. monthly disposals declining. Total disposals were 16mn shares. As of yesterday, Prosus's stake fell to 22.74%, down 8bps vs. the last earnings date. Company buybacks in Q4 were nearly HKD 20bn, slightly lower QoQ. On a daily basis post last earnings until the latest blackout, buybacks averaged ~HKD 635mn per day, above the prior ~HKD 550mn. Given the recent pullback, even with priority on AI investment this year, buybacks will likely resume at a high pace after the print. ![图表描述已自动生成](https://pub.pbkrs.com/uploads/2026/6eee51043d52383d43b6a5f519705448?x-oss-process=style/lg) **Dolphin Research on 'Tencent Holdings':** **Earnings season (past year)** Nov 13, 2025 call Trans '[Tencent Holdings (Trans): Focused on AI, but lowered full-year capex guide](https://longbridge.cn/topics/36331836?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=3c23cc7f-6199-4b8d-9c46-94608fd59010)' Nov 13, 2025 earnings First Take '[Tencent: Not playing Meta's game; steady and sure](https://longbridge.cn/topics/36331836?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=3c23cc7f-6199-4b8d-9c46-94608fd59010)' Risk disclosure and statement for this article: [Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### 相關股票 - [TENCENT (00700.HK)](https://longbridge.com/zh-HK/quote/00700.HK.md) - [TENCENT-R (80700.HK)](https://longbridge.com/zh-HK/quote/80700.HK.md) - [Tencent (TCEHY.US)](https://longbridge.com/zh-HK/quote/TCEHY.US.md) - [Tencent Holdings Limited (TCTZF.US)](https://longbridge.com/zh-HK/quote/TCTZF.US.md) - [Meta Platforms (META.US)](https://longbridge.com/zh-HK/quote/META.US.md) - [Tencent HK SDR 10to1 (HTCD.SG)](https://longbridge.com/zh-HK/quote/HTCD.SG.md) ## 評論 (3) - **库区西坑 · 2026-03-19T01:45:57.000Z**: Stock price volatility has increased. - **有鱼的地方 · 2026-03-18T13:54:59.000Z · 👍 1**: It's the fourth quarter earnings report, not the third quarter. - **Dolphin Research** (2026-03-19T02:07:22.000Z): Typo, already corrected, thanks!