Tencent is putting AI into everything, but when will it pay off?

In the first quarter of 2026, almost everything at Tencent was connected to artificial intelligence.

In the quarter, Tencent generated revenue of RMB 196.46 billion (USD 28.8 billion), up 9% year-on-year (YoY). Non-IFRS operating profit reached RMB 75.63 billion (USD 11.1 billion), also up 9%. Heavy AI investment appears to have pulled non-IFRS operating profit growth down from what could have been double digits to single digits.

Tencent’s financial results show that, excluding the revenue, costs, and expenses of new AI products including Hunyuan, Yuanbao, CodeBuddy, WorkBuddy, and QClaw, non-IFRS operating profit would have grown 17% YoY.

To support model iteration and AI infrastructure buildout, Tencent spent RMB 22.54 billion (USD 3.3 billion) on R&D this quarter, up 19% YoY. Capital expenditure reached RMB 31.94 billion (USD 4.7 billion), up 16%. Its AI spending is also set to keep expanding steadily.

James Mitchell, Tencent’s chief strategy officer and senior executive vice president, said on the earnings call that the company had become more confident in its previous guidance that capital expenditure would rise this year. “We should expect a substantial increase in [capital expenditure], especially in the second half of this year as more China-designed ASICs become available to us month by month through the year,” Mitchell said.