By Reuters

(Reuters) - Tencent Holdings reported a 13% increase in fourth-quarter revenue on Wednesday, driven by strong demand for gaming and growth in ‌its artificial intelligence services, cementing its position as China's largest social media ‌and gaming company.

The Shenzhen-based firm posted revenue of 194.4 billion yuan ($28.3 billion) for the three months to ​December 31, just above the 193.5 billion yuan forecast by analysts polled by LSEG.

Quarterly net profit was 58.26 billion yuan, compared with an average estimate of 57.75 billion yuan.

Tencent has been accelerating AI investments funded by its gaming arm as it competes with ‌rivals including Alibaba and ByteDance.

The ⁠company is embedding AI across its WeChat messaging and payment app, cloud services and gaming, drawing on an ecosystem of more than ⁠one billion users.

Domestic gaming revenue rose 15% to 38.2 billion yuan, while international gaming revenue surged 32% to 21.1 billion yuan. Online advertising revenue climbed 17% to 41.1 billion ​yuan, boosted ​by AI-enhanced ad targeting.

Gaming growth was driven ​by newer titles including "Delta Force" and "Valorant ‌Mobile", alongside established hits "Honor of Kings" and "Peacekeeper Elite".

Revenue in its FinTech and Business Services segment, which includes cloud computing, rose 8% to 60.8 billion yuan. Tencent does not break out cloud revenue separately.

AI INVESTMENT RAMPS UP

To compete with rivals such as Alibaba Group and ByteDance, Tencent ramped up AI talent acquisition, including hiring former OpenAI researcher ‌Yao Shunyu to lead the development of ​its proprietary Hunyuan large language model.

It spent 1 billion ​yuan promoting its Yuanbao AI ​chatbot during the Lunar New Year holiday period to gain market ‌share in China's increasingly crowded AI sector.

This ​month, it launched ​its "OpenClaw" AI product suite, comprising QClaw for individual users, Lighthouse for developers and WorkBuddy for enterprises, as competition intensifies around AI agents - software that can perform ​multi-step tasks autonomously.

Capital expenditure ‌for 2025 totalled 79.2 billion yuan, compared to 76.8 billion yuan in ​2024.

($1 = 6.8752 Chinese yuan)

(Reporting by Liam Mo and Miyoung Kim. Editing by ​Himani Sarkar, Mark Potter and Pooja Desai)

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