China’s Tencent reports 13% rise in quarterly revenue driven by AI and gaming growth

Chinese technology conglomerate Tencent Holdings on Wednesday posted its strongest quarterly revenue since going public in 2004, after spending much of its investments in artificial intelligence (AI) initiatives and gaming last year.

For the first quarter ending March 2025, Tencent reported revenue of 180 billion yuan (US$25 billion), a 13% year-over-year increase that surpassed analyst expectations of 10%, according to a Bloomberg survey.

Profits rose by 14% to 48 billion yuan, but it missed the consensus estimate of 51.7 billion yuan and fell short of the 23.4% profit growth analysts had anticipated. Tencent’s stock closed up 3% on Wednesday at HK$521 (US$67) in Hong Kong trading, just ahead of the release of its financial results.

AI and gaming yields results 

In a statement accompanying the earnings report, Tencent said that AI capabilities delivered meaningful benefits in performance-based advertising and game titles. The company confirmed it increased investments in AI, including its Yuanbao chatbot and AI features within Weixin, the Chinese version of 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,” Tencent stated.

Revenue from value-added services, which include Tencent’s flagship gaming and social network platforms, climbed 17% to 92 billion yuan compared to the same period a year earlier. Meanwhile, its fintech and business services division, consisting of AI and cloud computing, grew by 5% to reach 55 billion yuan.

The AI market reached US$4.1 billion in 2024 and is projected to grow at a compound annual growth rate of 31% to US$62.8 billion by 2034, according to research from Market Research Future.

Yuanbao chatbot and DeepSeek collaboration

Tencent’s Yuanbao chatbot user base surged exponentially between January and April, with monthly active users increasing 11-fold to 41.4 million. This makes Yuanbao the fourth-most used AI application in China, trailing Alibaba’s Quark, ByteDance’s Doubao, and DeepSeek’s own chatbot, according to AI tracking platform AIcpb.com.

The AI engine behind Yuanbao allows users to choose between Tencent’s own Hunyuan model and the DeepSeek model. Tencent was among the first firms to incorporate DeepSeek’s AI into its systems. DeepSeek described Tencent’s solution as “instrumental in resolving a persistent technical issue in its infrastructure.”

The tech giant has established a new “e-commerce product department” within the WeChat business group to bolster transaction capabilities within the app.

According to a report by Chinese financial news outlet Yicai, the newly formed department will be led by Zeng Ming, who reports directly to WeChat president Zhang Xiaolong. 

WeChat’s monthly active user base grew 3% year over year, reaching 1.4 billion as of March, reinforcing its status as a foundational part of the company’s digital ecosystem.

Microsoft-Linked AI team joins Tencent

In other related news, Tencent’s AI division Hunyuan has reportedly signed talent from WizardLM, an AI research group previously operating under Microsoft in Beijing. 

In a now-deleted post, Can Xu, a senior AI scientist and former leader within WizardLM, announced on X yesterday that he and several colleagues had officially joined Tencent’s Hunyuan.

In an April 2024 post, the WizardLM team explained the removal, saying, “We accidentally missed an item required in the model release process, toxicity testing.”

Since joining Tencent, the former WizardLM group has contributed to the development of a new model named Hunyuan-TurboS 0416. According to Qingfeng Sun, who identifies as a co-founder of WizardLM, the Hunyuan-TurboS 0416 model outperforms other open-source alternatives, including Google’s Gemma 3 series.

The exact number of WizardLM researchers who migrated to the tech company is unknown, and neither it nor Microsoft have commented on the transition.

Hunyuan, with fresh talent from WizardLM, is reportedly developing generators for both video and 3D content.

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