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Globe and Mail
a day ago
- Business
- Globe and Mail
Why Tencent Rallied Today
Key Points Tencent delivered strong Q2 results. Revenue accelerated and grew double-digits across most business segments. Artificial intelligence and a recovering Chinese economy are helping lift results. 10 stocks we like better than Tencent › Shares of Chinese tech giant Tencent (OTC: TCEHY) rallied on Wednesday, up 6.8% as of 3:47 p.m. ET. Tencent, which is arguably the best company in China, reported second-quarter earnings that apparently impressed investors. It's easy to see why; revenue growth accelerated relative to the prior quarter and year, along with continued margin expansion. Unsurprisingly, artificial intelligence leadership was mentioned as a key factor behind the top-line growth and cost controls. Tencent grows double-digits almost everywhere Tencent's revenue is on a $100 billion run-rate, so it's really impressive that the company was able to accelerate its revenue growth in light of the law of large numbers. Total revenue grew 15% year over year, a higher rate than the 13% rate last quarter and the 8% growth rate in the year-ago quarter. Every major segment for Tencent grew double-digits, reflecting broad-based strength, except for Social Networks, which saw just 6% growth due to a lack of compelling new content in video streaming. Still, the other major segments including Domestic Games and International Games grew 17% and 35%, respectively. Marketing revenue was up 20%, and FinTech and Business Services revenue was up 10%. Impressively, margins also expanded with gross margins expanding by 1.1 percentage points relative to last quarter. While adjusted (non-IFS) operating margins fell quarter over quarter, that appears to be a seasonal trend possibly around compensation. Relative to the prior year, adjusted operating margins expanded by 1.2 percentage points to a strong 37.5%. The acceleration shows the Chinese economy, which had been in near-recessionary conditions for a couple years, may finally be recovering on the back of last year's stimulus measures. But some of the acceleration could also be due to AI. Management touted the use of AI across all its business segments, including game and content production, online advertising effectiveness, and Tencent's cloud business. Tencent is a core holding for a Chinese portfolio For those willing to invest in China, Tencent should be at the top of the list. The company is diversified across not one but several high-margin businesses, and allocates profits effectively across dividends, buybacks, and investments in other companies. With net cash on its balance sheet and over $100 billion worth of outside investments -- roughly 15% of its market cap -- Tencent's 27 P/E ratio is hardly demanding, even after this nice recent run. Should you invest $1,000 in Tencent right now? Before you buy stock in Tencent, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tencent wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025
Yahoo
29-07-2025
- Business
- Yahoo
As Nvidia Gets Ready for New China H20 Shipments, How Should You Play NVDA Stock?
Nvidia (NVDA) shares remain in focus following a Reuters report that the company is warming up to resume its business in China. NVDA has placed an order with Taiwan Semiconductor (TSM) for some 300,000 of its H20 AI chips to meet the anticipated pent-up demand that's about to be unlocked in China. More News from Barchart Tesla Just Signed a Chip Supply Deal with Samsung. What Does That Mean for TSLA Stock? Here's What Happened the Last Time Novo Nordisk Stock Was This Oversold Dear Microsoft Stock Fans, Mark Your Calendars for Aug. 1 Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! Nvidia has already built an inventory of up to 700,000 chips following President Donald Trump's administration's reassurances that it will soon be able to serve its Chinese customers again. NVDA stock is currently up more than 100% versus its year-to-date low. Renewed Access to China Is a Huge Positive for Nvidia Stock The aforementioned order placed with TSMC suggests Nvidia is getting ready to start shipping its H20 chips to Beijing, a bullish signal for the company's stock price for several reasons. For starters, China accounts for roughly 13% of Nvidia's overall revenue and with rising demand from giants like Tencent (TCEHY) and Alibaba (BABA), the ability to serve this market again could unlock billions in sales. Additionally, renewed access to China will prevent further inventory write-downs and help NVDA defend its market share against emerging domestic competitors like Huawei. All in all, resuming business with its customers in Beijing may over time unlock significant further upside in Nvidia stock. How High Could NVDA Shares Fly in 2025? Despite explosive returns over the past four months, Truist analyst William Stein continues to see potential for further upside in NVDA shares in the second half of 2025. Earlier in July, Stein reiterated his 'Buy' rating on Nvidia stock, citing its full-stack advantage, not just in chips, but also in software and pre-trained models. He expects Nvidia will launch a client-side CPU by the end of this year, unlocking an estimated $35 billion in new total addressable market (TAM). Stein currently sees another 20% upside (roughly) in the AI stock from here. Nvidia Continues to Be the Street's Favorite AI Stock Nvidia's continued dominance in the AI market is keeping other Wall Street firms bullish on it as well. According to Barchart, the consensus rating on Nvidia shares remains at 'Strong Buy' with the mean target of about $182 indicating potential upside of another 4% from here. On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
