TENCENT(HK:00700) Di Yi Cai Jing·2025-08-14 06:13Core Viewpoint - Tencent Holdings has seen a significant increase in its stock price, reaching 600 HKD per share for the first time in nearly four years, reflecting positive market sentiment following its Q2 2025 earnings report [1][3]. Financial Performance - For Q2 2025, Tencent reported revenue of 184.5 billion CNY, a year-on-year increase of 15%, and operating profit (Non-IFRS) of 69.2 billion CNY, up 18% year-on-year [3]. - The gross margin for the quarter was 57%, which is an increase of 4 percentage points compared to the previous year [3]. AI Investment and Impact - The earnings report highlighted Tencent's ongoing investment in AI, with CEO Ma Huateng noting that the company is benefiting from AI applications in its gaming platforms like "Honor of Kings" and "Peacekeeper Elite" [3]. - Marketing services revenue reached 35.8 billion CNY, a 20% increase year-on-year, driven by improvements in AI-driven advertising platforms and enhancements in the WeChat transaction ecosystem [3]. - The growth in enterprise services revenue accelerated due to increased demand for AI-related services, including GPU leasing and API token usage [3]. Expenditure on AI - Tencent's general and administrative expenses rose to 31.9 billion CNY, a 16% increase year-on-year, primarily due to higher R&D spending and employee costs related to AI business development [5]. - Capital expenditures surged by 119% to 19.1 billion CNY, mainly for investments in IT infrastructure and data centers [5]. Gaming Performance - International gaming revenue for the quarter was 18.8 billion CNY, while domestic gaming revenue was 40.4 billion CNY, reflecting year-on-year growth of 35% and 17%, respectively [5]. - The new game "Delta Operation" achieved an average daily active user count of over 20 million in July, ranking among the top five in the industry for daily active users and top three in revenue [5]. Future Outlook on AI - During the earnings call, Tencent's management emphasized the goal of enhancing existing business efficiencies through AI in sectors such as advertising, gaming, and fintech, with plans to explore monetization models for AI over time [5]. - Regarding AI computing chips, management indicated that while the situation with chip imports needs monitoring, Tencent currently has sufficient chips for training and upgrading existing models, with various options available for inference [5].