Chinese gaming and social media tech giant Tencent's profit for the for the second quarter of the calendar year 2026 missed analysts' estimates, while its revenue for the same period surpassed them, according to reports on Wednesday.
The firm's profit was up 9% at 56 billion Chinese yuan in comparison to the estimate of 61.82 billion yuan, while revenue was at 204.78 billion yuan, up 11% in comparison to analysts' projection of 202.17 billion yuan.
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Tencent is the parent company of social media apps such as WeChat and QQ, which are used extensively by Chinese citizens. It also owns some of the largest video game companies in the world such as Riot Games which makes the popular online multiplayer games 'Valorant' and 'League Of Legends'. It further holds a majority stakes in Epic Games, the studio behind the popular battle royale game 'Fortnite'; as well as a minority stake in mobile game developer SuperCell, who created 'Clash Of Clans'.
The firm stated that its domestic games revenue logged a 17% increase on a year-on-year basis on the back of games such as 'Delta Force' and 'Valorant' for PC and mobile platforms. This was a notable step up from 6% growth it saw in this category for the first quarter as well as the year-ago period.
The firm's international game revenue saw a 0.8% decline on a year-on-year basis due to currency volatility, as per the firm. The revenue increased 4% on the basis of constant currency.
Tencent's profit was weighed down by its spending to upgrade its AI infrastructure while facing severe competition in the field from Alibaba, DeepSeek and Moonshot AI.
The company's capex (capital expenditure) had shot up by 65% sequentially to 52.8 billion yuan in the second quarter due to its continued purchase and construction of computing infrastructure in order to improve the profitability of its AI models. The firm reported a fresh cash flow of negative 13.8 billion yuan in the aforementioned quarter due to these practices.
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Tencent's Chief Strategy Officer James Mitchell said that it is creating "state-of-the-art" AI models and applications which would result in "superior economic returns over the longer term.”
The company has used AI to tweak its ad-recommendation models, that determine which advertisements will be displayed to users of its social media platforms. The division's revenue increased 22% to 43.6 billion yuan from the prior year.
It also integrated AI assistant AI 'Xiaowei' in its WeChat platform.
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