Tencent chooses to "lie flat" on WeChat.

Author | Zhang Fan, Huang Yida

Editor | Huang Yida

On November 13th, Tencent released its third - quarter report, and the performance was typically "Tencent - style".

The financial report shows that Tencent achieved revenue of 192.869 billion yuan in Q3 2025, a year - on - year increase of 15%, slightly exceeding market expectations. The positive growth of the three core businesses - gaming, advertising, and financial technology and enterprise services to varying degrees was the main support for Tencent's steady revenue growth this quarter.

In terms of business, the core highlight of the gaming business was that the overseas gaming revenue skyrocketed by 43% year - on - year this quarter; the growth of advertising business revenue benefited from both the increase in advertising loading rate and the growth of advertisers' investment. AI was also an important internal driving force for revenue growth; the growth of financial technology and enterprise services revenue reflected on the one hand the recovery of the economy driving the warming - up of financial technology - related demand, and the growth of enterprise services revenue was mainly driven by the cloud business.

In terms of business, the core growth engine of the gaming business this quarter came from the international gaming division; the growth of advertising business revenue benefited from both the increase in advertising loading rate and the stronger willingness of advertisers to invest. AI was the key internal driving force; the growth of financial technology revenue accelerated slightly, mainly due to the economic recovery driving the warming - up of financial demands such as payment and loans, and enterprise services were driven by the development of the cloud business.

In terms of profit, Tencent continued its previous strong growth level. The gross profit in the same period was 108.8 billion yuan, a year - on - year increase of 22%; the non - IFRS operating profit in the same period was 72.6 billion yuan, a year - on - year increase of 18%. It is worth noting that the year - on - year growth rates of gross profit and operating profit have led the year - on - year revenue growth for twelve consecutive quarters.

Chart: Summary of Tencent Holdings' financial report; Source: Company financial report, 36Kr

In addition to core financial data such as revenue, gross profit, and operating profit, Tencent's capital expenditure was also the focus of market attention. The company's capital expenditure in the quarter was 12.98 billion yuan, a year - on - year decrease of 24% and a more than 32% decrease from the previous quarter.

At the subsequent earnings conference call, Tencent's senior management said that the full - year capital expenditure in 2025 is expected to be lower than the previous guidance range but still higher than that in 2024.

As one of the important players in the AI field, Tencent is also an important participant in AI infrastructure construction. Its capital expenditure lower than the guidance can be said to have poured cold water on the current AI boom.

01 The Not - So - High Guidance

In this round of AI market trend, Alibaba has taken an aggressive approach. At the earnings conference in early 2025, it announced an investment of 380 billion yuan over three years for the construction of cloud and AI hardware infrastructure, setting the largest - scale investment record in the field of cloud and AI hardware infrastructure construction by a Chinese private enterprise.

Subsequently, investors turned their attention to Tencent, the largest listed Internet giant in China. However, at its 2024 annual earnings conference, when responding to the growth rate of capital expenditure in 2025, Tencent gave a vague figure: "low teens". "Low - teens" means about 10 - 13% of the full - year revenue in 2025.

Considering that Tencent's revenue in 2024 was 660 billion yuan and adding the part of performance growth, the market generally expected Tencent's capital expenditure in 2025 to be around 90 billion yuan, only about a 17% increase compared with the 76.8 billion yuan of capital expenditure in 2024. Obviously, the "Low Teens" expectation at the beginning of 2025 could not meet the market's appetite.

With the release of Tencent's third - quarter report, it was clear that the capital expenditure guidance would be further lowered, only indicating that it would be higher than that in 2024. If in the second - quarter report, the market could accept the reason of "chip shortage" caused by overseas export controls when Tencent's capital expenditure was low and hoped for a rebound in Q3. Although Tencent has announced a further reduction in capital expenditure, the company also clearly stated that its current GPU reserves can fully meet internal usage needs.

Chart: Tencent's capital expenditure level in recent years; Source: Company financial report, 36Kr

02 Aggressive Alibaba and Laid - Back Tencent

In this round of domestic AI infrastructure construction, Alibaba took the lead, while other Internet giants such as Tencent and ByteDance were much more low - key. This was significantly different from the fierce competition among overseas companies such as Google, Amazon, and Microsoft. This phenomenon was essentially determined by the competitive landscape of the cloud market. The intense competition among multiple overseas giants in the cloud market was more intense than that in the domestic market.

In the global cloud market in Q2 2025, Amazon accounted for 32%, Microsoft 22%, and Google 11%, with growth rates of 17.5%, 39%, and 31.7% respectively. Microsoft and Google, with relatively lower market shares, were catching up. Correspondingly, Alibaba Cloud was dominant in the domestic market. According to Omdia data, in the first half of 2025, Alibaba Cloud's market share was 35.8%, far ahead of Volcengine Cloud in second place with 14.8% and Huawei Cloud in third place with 13.1%.

Relying on its advantages in the cloud business, Alibaba was willing to make more aggressive investments in AI.

Chart: Competitive landscape of the domestic cloud market in H1 2025; Source: Omdia, 36Kr

Moreover, different from Tencent's WeChat social base, Alibaba's core e - commerce business was facing challenges from multiple aspects. Currently, the domestic e - commerce market was a landscape of numerous giants. There was Pinduoduo taking the low - price route, JD.com focusing on high - quality services, and Douyin moving towards e - commerce.

Alibaba's market share in the Chinese e - commerce market once approached 85% in 2015, but under the multi - pronged attack, it had declined to less than 40% by 2024. Therefore, under pressure on its e - commerce base and with the approaching end of the traffic dividend, Alibaba was willing to open up a new battlefield in the AI field, and the corresponding investment was relatively more aggressive.

In contrast, with WeChat, a national - level social app, as its core moat, Tencent was much more cautious about the potential high risks of high - input in AI infrastructure. On the one hand, Meta, also an Internet social giant, was currently trapped in the "black hole" of high - cost AI infrastructure investment, providing a cautionary tale for Tencent; on the other hand, in the winner - takes - all pattern in the large - model field, how to catch up with Qwen was a major unknown.

Chart: Stock price trends of Tencent and META; Source: Wind, 36Kr

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The content of this article only represents the author's views.

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