Tencent Q2 revenue climbs 11% on AI-driven ad gains, but profit falls short

Investors have been focused on whether Tencent's heavy AI spending is starting to generate returns, or merely weighing on margins.

Capital expenditure totalled about 79 billion yuan last year, up from 77 billion yuan in 2024, and the company has signalled AI investment will step up further in the second half of this year.

Capital expenditure in the June quarter was 52.8 billion yuan, compared with 31.9 billion yuan in the first quarter.

"We're comfortable in making significant investments in AI because not only is there substantial upside potential, there's also clear downside protection," Tencent President Martin Lau said on a post-earnings call.

He added that even renting out its compute capacity alone would be profitable — a fallback that left management comfortable.