Tencent (TCEHY, Financial) is making noise again. The Chinese tech titan just delivered its strongest quarter in over three years, with Q1 revenue jumping 13% to 180.02 billion yuan ($25 billion). Not bad for a company navigating tariff tensions, a shaky consumer market, and AI disruption. Net income rose 14% to 47.8 billion yuan—missing estimates slightly, but for a reason that might excite long-term investors: aggressive AI spending. Management isn't shying away from pouring cash into R&D, and so far, markets are on board—Tencent shares are already up 25% in 2025.
Here's where it gets interesting. Tencent isn't just chasing AI headlines—it's stacking chips (literally). President Martin Lau confirmed the company has enough high-end GPUs to keep training its models “for a few more generations.” Thanks to a surge in demand from its cloud clients and the success of China's homegrown DeepSeek AI, Tencent is now embedding AI everywhere—from WeChat and mini-games to ad targeting and virtual assistants. And while executives admit the profit margin might take a short-term hit, they're betting that full-stack integration across products will pay off down the line.
But Tencent isn't just betting on the future—it's securing IP to own it. Last year's hits like Dungeon & Fighter Mobile helped steady its gaming business, and 2025's pipeline includes Honor of Kings: World and Path of Exile 2. But the real headline? Tencent's $1.25 billion deal for a 25% stake in a new Ubisoft entity, giving it a direct line into franchises like Assassin's Creed. It's a classic Tencent move: think long-term, go global, and let the compounding do the work.
