BEIJING (Reuters) -Chinese technology giant Tencent said on Wednesday it would boost capital expenditure in 2025, as it doubles down on artificial intelligence development and infrastructure.
Tencent President Martin Lau told reporters in a post-earnings call that capital spending would rise to the “low teens” as a percentage of revenue, with AI as a key focus of strategic investments.
Capital expenditure surged to $10.7 billion in 2024, from $3.4 billion a year earlier, to reach 12% of total revenue, Lau said. The company spent 39 billion yuan ($5.4 billion) in the fourth quarter on AI initiatives.
“We will continue to increase our AI investments, increasing investment in our proprietary Huanyuan model while expanding our contributions in multimodal and open-source capabilities,” Lau said.
The company beat analyst expectations, posting revenue of 172.4 billion yuan ($23.83 billion) for the fourth quarter, up 11% on the year. Analysts had expected 168.9 billion yuan, according to LSEG data.
Net profit was 51.3 billion yuan, compared with analyst expectations of 46.3 billion yuan according to LSEG data.
The revenue growth was primarily fueled by robust performance in the gaming segment, as the company benefited from regulatory easing in China’s gaming sector following stringent restrictions in previous years.
Tencent’s domestic gaming business has shown robust recovery since mid-2024, bolstered by successful game releases, including Dungeon & Fighter Mobile and Delta Force.
For the quarter, domestic gaming revenue rose by 23% to 33.2 billion yuan, while international gaming revenue climbed 15% to 16 billion yuan.
Revenue from its marketing services segment, comprising online advertising, grew 17% to 35 billion yuan.
The fintech and business services segment, which encompasses payment services, wealth management products, and cloud computing solutions, posted revenue of 56.1 billion yuan, a 3% increase year-on-year.
($1 = 7.2357 Chinese yuan)
(Reporting by Liam Mo and Brenda Goh; Editing by Kate Mayberry and Bernadette Baum)
