Two very different stories about AI spending in China are playing out at the same time. Tencent, the $500B-plus conglomerate behind WeChat and a gaming empire, posted solid revenue growth in its most recent quarter. DeepSeek, the AI startup that grabbed global attention with its cost-efficient models, has paused follow-on fundraising as the bill for scaling its infrastructure climbs faster than expected.
Tencent’s core business is subsidizing its AI ambitions
Tencent’s Q1 2026 results, released on May 13, showed revenues of RMB 196.5 billion, a 9% increase year-over-year. That number actually came in below analyst expectations.
The more telling figure sits in Tencent’s operating profits from its core activities, excluding new AI products. That metric rose 17% to RMB 84.4 billion. Gaming, advertising, and cloud services are not just holding steady—they’re accelerating.
Net profits landed somewhere between RMB 58.1 billion and RMB 69.8 billion. The gap between strong operating profits and comparatively compressed net profits reflects one thing: Tencent is spending aggressively on AI.
