Tencent Holdings reported Q2 2026 revenue of RMB204.8 billion, a figure up 11% from a year earlier. However, reported net profit barely moved as the Chinese tech giant poured even more funding into AI infrastructure. 

The revenue figure, equal to about US$30.4 billion for the three months ending 30 June, came in just ahead of the market. The South China Morning Post reported that analysts had expected RMB202.8 billion, while KLSE Screener, citing LSEG data placed the consensus at RMB202.2 billion. Tencent cleared the bar with even more than analysts expected.

Net profit stagnant due to increased capex

Using the IFRS basis, net profit attributable to equity holders hit RMB56.0 billion, which is a rise of only 0.7% year on year. This figure fell well short of the RMB61.8 billion analysts had previously penciled in. Tencent’s own results statement confirmed the 0.7% gain and listed basic earnings per share of RMB6.207.

On Tencent’s preferred non-IFRS basis, which removes single time and non-cash items, adjusted net profit came in at RMB68.4 billion. SCMP reported that number landed in line with the RMB68.2 billion consensus from the analysts and was an increase from the RMB63.1 billion of a year earlier.

Tencent’s statement put capex for Q2 at RMB52.8 billion, a jump of 176% from the same period in 2025. Chairman and CEO Pony Ma Huateng said the spending reflects an increase in the procurement of compute that the company expects to “convert usage of our applications and models into revenue going forward,” according to his statement.

Ma pointed to two AI products from Tencent as early wins. These include WorkBuddy, an office productivity tool, and CodeBuddy, a coding assistant. He described both leading their respective categories in China, citing June 2026 usage data from research firm Analysys. Tencent groups these products including Hy models, Yuanbao and Xiaowei, under a “new AI products” label.

Tencent recorded negative free cash flow of RMB13.8 billion for the quarter, as the company’s operating cash of RMB52.7 billion got overrun by capex payments, media content costs and lease liabilities. The company also said free cash flow would have been positive at RMB37.6 billion if prepayments for compute were excluded from the final figures.

Tencent Q2 carried by games and ads

The company’s core business still did most of the heavy lifting in the quarter. Domestic games revenue rose 17% to RMB47.3 billion, with Tencent crediting titles including Delta Force and VALORANT. Value-added services revenue increased by 8% to RMB98.4 billion. TheStar attributed the top-line growth to strong advertising sales in addition to a steady gaming income.

Tencent runs the world’s largest video game business by revenue and WeChat, China’s dominant social network. The company is also racing ByteDance and Alibaba to turn AI into a durable growth engine, even though investors have not fully bought into the thesis.

SCMP reported Tencent shares were down 1.95% at HK$461.6 at the close of the market in Hong Kong on Wednesday, before the earnings release. During the quarter the company bought back about 37.4 million shares for about HK$16.9 billion according to the press statement.

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