15-05-2025
Tencent Just Dropped $25B Worth of Proof It's Not Playing Around
Tencent (TCEHY) is making noise again. The Chinese tech titan just delivered its strongest quarter in over three years, with Q1 revenue jumping 13% to 180.02 billion yuan ($25 billion). Not bad for a company navigating tariff tensions, a shaky consumer market, and AI disruption. Net income rose 14% to 47.8 billion yuanmissing estimates slightly, but for a reason that might excite long-term investors: aggressive AI spending. Management isn't shying away from pouring cash into R&D, and so far, markets are on boardTencent shares are already up 25% in 2025.
Here's where it gets interesting. Tencent isn't just chasing AI headlinesit's stacking chips (literally). President Martin Lau confirmed the company has enough high-end GPUs to keep training its models for a few more generations. Thanks to a surge in demand from its cloud clients and the success of China's homegrown DeepSeek AI, Tencent is now embedding AI everywherefrom WeChat and mini-games to ad targeting and virtual assistants. And while executives admit the profit margin might take a short-term hit, they're betting that full-stack integration across products will pay off down the line.
But Tencent isn't just betting on the futureit's securing IP to own it. Last year's hits like Dungeon & Fighter Mobile helped steady its gaming business, and 2025's pipeline includes Honor of Kings: World and Path of Exile 2. But the real headline? Tencent's $1.25 billion deal for a 25% stake in a new Ubisoft entity, giving it a direct line into franchises like Assassin's Creed. It's a classic Tencent move: think long-term, go global, and let the compounding do the work.
This article first appeared on GuruFocus.
