On August 12, Tencent released its financial results for the second quarter of 2026.
The company generated RMB 204.8 billion (USD 30.3 billion) in revenue during the quarter, up 11% year-on-year (YoY). Operating profit rose 12% to RMB 67.3 billion (USD 10 billion), while non-IFRS operating profit increased 9% to RMB 75.6 billion (USD 11.2 billion). Excluding contributions from newer artificial intelligence products, including Hy, Yuanbao, CodeBuddy, WorkBuddy, and Xiaowei, further adjusted non-IFRS operating profit would have reached RMB 86.1 billion (USD 12.7 billion), up 19%.
Tencent’s core businesses already have mature business models and a track record of steady growth. Investors are therefore paying particular attention to its AI business and the capital expenditure required to support it. On the product side, Hy3 has attracted attention for its price-performance ratio, while WorkBuddy has recorded a sharp increase in users.
Tencent has also stepped up its investment in AI. R&D expenses reached RMB 27.3 billion (USD 4 billion) during the quarter, up 35% YoY. Capital expenditure came to RMB 52.8 billion (USD 7.8 billion), up 176% from a year earlier and 65% from the previous quarter. That was consistent with management’s earlier guidance that capex growth would become more pronounced in the second half of the year. After capital expenditure, Tencent’s free cash flow also turned negative for the quarter, an unusual occurrence for the company.
