Advertisement

Tencent posts best quarter on record as world’s largest video games publisher bets on AI

The tech giant reported US$25 billion in revenue for the first quarter, its largest ever for a three-month period, beating estimates

Reading Time:2 minutes
Why you can trust SCMP
1
Tencent reported a 13 per cent surge in revenue for the first quarter, above estimates of 10 per cent. Photo: Shutterstock
Coco Fengin Guangdong
Chinese technology giant Tencent Holdings on Wednesday reported revenue of 180 billion yuan (US$25 billion), its largest quarterly income since listing in Hong Kong in 2004, driven by continued efforts in artificial intelligence (AI) and video gaming.

Revenue grew 13 per cent in the first three months of the year, beating estimates of 10 per cent by analysts polled by Bloomberg.

Quarterly profit increased 14 per cent to 48 billion yuan, falling short of analysts’ estimates of 51.7 billion yuan and growth of 23.4 per cent.

Tencent’s shares closed up 3 per cent at HK$521 (US$67) on Wednesday, ahead of its latest financial disclosure.

“AI capabilities already contributed tangibly to our businesses, such as performance advertising and evergreen games. We also stepped up our spending on new AI opportunities, such as the Yuanbao application and AI in Weixin,” Tencent CEO Pony Ma Huateng said during an earnings call on Wednesday, using the Chinese name for WeChat. “We expect these strategic AI investments will create value for users and society, and generate substantial incremental returns for us over the longer term.”

Company president Martin Lau said during the call that some of the company’s investments in graphics processing units (GPUs) and AI had “already generated revenue … such as improved ad targeting, which boosts ad revenue, improved content recommendation, which boosts user time spent, and thus ad revenue”.

Although GPUs such as Nvidia’s China-tailored H20 were now banned in China, Lau said Tencent was able to manage because it had a “strong stockpile” of chips and it allocated more resources to the applications that “would generate immediate return”.

Advertisement