Tencent Holdings (TCEHY) AI Stock Analysis

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Tencent Holdings

(OTC:TCEHY)

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Outperform 76 (OpenAI - 4o)

Rating:76Outperform

Price Target:

$91.00

▲(13.88% Upside)

Tencent Holdings' strong financial performance and positive earnings call are the most significant factors driving the score, reflecting robust profitability and strategic growth in key segments. Technical analysis indicates mixed signals, and valuation suggests fair pricing. The absence of notable corporate events and a low dividend yield slightly temper the overall score.

Positive Factors

Revenue Growth

Tencent's strong revenue growth, particularly in gaming and fintech, indicates robust market demand and effective business strategies.

AI and Technology Advancements

Investments in AI enhance Tencent's technological capabilities, supporting long-term innovation and competitive advantage.

Strategic Partnerships

The partnership with Apple strengthens Tencent's ecosystem, potentially increasing user engagement and monetization opportunities.

Negative Factors

R&D Expenses

High R&D expenses, while supporting innovation, may pressure margins if not managed effectively, impacting profitability.

Video Subscription Challenges

Declining video subscription revenue suggests challenges in content strategy, potentially affecting Tencent's digital content segment.

CapEx Spending Concerns

The discrepancy between CapEx accrual and cash payments could strain cash flow, affecting Tencent's financial flexibility.

Tencent Holdings (TCEHY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$708.08B

Dividend Yield0.74%

Average Volume (3M)348.57K

Price to Earnings (P/E)23.6

Beta (1Y)0.31

Revenue Growth13.39%

EPS Growth31.03%

CountryUS

Employees110,558

SectorCommunication Services

Sector Strength97

IndustryInternet Content & Information

Share Statistics

EPS (TTM)1.07

Shares Outstanding9,120,467,000

10 Day Avg. Volume474,514

30 Day Avg. Volume348,568

Financial Highlights & Ratios

PEG Ratio0.26

Price to Book (P/B)3.70

Price to Sales (P/S)5.45

P/FCF Ratio22.14

Enterprise Value/Market Cap6.26

Enterprise Value/Revenue6.30

Enterprise Value/Gross Profit11.51

Enterprise Value/Ebitda17.00

Forecast

1Y Price Target

$102.00

Price Target Upside27.64% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

EPS Forecast (FY)N/A

Revenue Forecast (FY)N/A

Tencent Holdings Business Overview & Revenue Model

Company DescriptionTencent Holdings Limited, an investment holding company, provides value-added services (VAS) and Online advertising services in Mainland China and internationally. The company operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. It offers online games and social network services; FinTech and cloud services, and online advertising services. The company is also involved in the production, investment, and distribution of films and television programs for third parties, as well as copyrights licensing, merchandise sales, and other activities. n addition, it develops software; develops and operates online games; and provides information technology, information system integration, asset management, online literature, and online music entertainment services. Tencent Holdings Limited company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

How the Company Makes MoneyTencent generates revenue through multiple key streams, primarily from online gaming, social networks, digital content, fintech services, and cloud computing. The gaming segment is a significant contributor, with the company owning and distributing popular games like Honor of Kings and PUBG Mobile. Social networks, particularly through WeChat and QQ, generate income from advertising, subscription services, and in-app purchases. Tencent's fintech services, including WeChat Pay, provide transaction fees and value-added services. Moreover, the cloud computing division has seen substantial growth, offering infrastructure and services to enterprises, which adds to its revenue. Strategic partnerships with global gaming companies and investments in tech startups also bolster its earnings potential.

Tencent Holdings Key Performance Indicators (KPIs)

Any

Total Video Subscribers

Total Video Subscribers
Indicates the number of users subscribed to Tencent's video services, reflecting the platform's reach and potential for ad and subscription revenue.

Chart InsightsTencent's total video subscribers have experienced fluctuations, peaking in 2021 before a gradual decline. The recent earnings call highlights strong financial performance and strategic AI investments, yet subscriber growth remains stagnant. Despite successful video accounts marketing, the subscriber base has not expanded significantly, possibly due to increased competition and market saturation. Tencent's focus on AI and cloud services suggests a shift in strategic priorities, potentially impacting future subscriber dynamics.

Data provided by:

The Fly

Tencent Holdings Earnings Call Summary

Earnings Call Date:Nov 13, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Mar 18, 2026

Earnings Call Sentiment Positive

The earnings call reflects a strong financial performance with notable growth in revenue and profits, particularly in the games and fintech segments. AI advancements and marketing services also contributed positively. However, challenges such as decreased video subscriptions and high R&D expenses were noted.

Q3-2025 Updates

Positive Updates

Strong Financial Performance

Total revenue reached RMB 193 billion, up 15% year-on-year. Gross profit was RMB 109 billion, up 22% year-on-year. Non-IFRS operating profit was RMB 73 billion, up 18% year-on-year.

Games Segment Growth

Domestic Games revenue grew by 15% year-on-year, with Delta Force becoming a top 3 game in China. International Games revenue increased by 43% year-on-year.

AI and Technology Advancements

Tencent upgraded its Hunyuan foundation model, enhancing capabilities in AI applications. The Hunyuan image generation model ranked first globally among text-to-image models.

Marketing Services Expansion

Marketing Services revenue increased 21% year-on-year, driven by ad spend growth and enhanced engagement across platforms like video accounts and Mini Shops.

FinTech and Business Services Growth

Segment revenue was RMB 58 billion, up 10% year-on-year. Commercial payment services and consumer loan services drove growth.

Negative Updates

Challenges in Long-form Video Subscriptions

Long-form video subscription revenue decreased 3% year-on-year, with a 2% decline in video subscribers due to delayed content releases.

CapEx Spending Concerns

CapEx was around RMB 13 billion, but cash payment for CapEx was RMB 20 billion, reflecting a timing gap between accrual and cash payment.

High R&D Expenses

R&D expenses rose by 28% year-on-year to RMB 22.8 billion, primarily due to higher staff costs and increased infrastructure investment for AI initiatives.

Company Guidance

During the third quarter of 2025, Tencent Holdings Limited reported significant financial gains, with total revenue reaching RMB 193 billion, marking a 15% year-on-year increase. The company's gross profit rose to RMB 109 billion, up 22% year-on-year, and the non-IFRS operating profit and net profit attributable to equity holders both increased by 18% year-on-year to RMB 73 billion and RMB 71 billion, respectively. Key growth areas included games, marketing services, and fintech and business services. In particular, the domestic games segment generated RMB 96 billion in revenue, up 16% year-on-year, with notable performances from games like Delta Force and VALORANT. The international games segment experienced a remarkable 43% year-on-year revenue increase, driven by factors such as upfront revenue recognition from Dying Light: The Beast and studio acquisitions. Tencent's strategic investment in AI, particularly in ad targeting and game engagement, contributed to these results, while improvements in the Hunyuan foundation model further bolstered its technological capabilities. The company also reported a non-IFRS diluted EPS rise of 19% year-on-year to RMB 7.575, despite a slight increase in R&D expenses by 28% year-on-year, reflecting investment in AI initiatives.

Tencent Holdings Financial Statement Overview

Summary

Tencent Holdings exhibits strong financial health with high profitability and efficient cost management. The company maintains a solid capital structure and prudent financial leverage, although revenue growth has slowed. Stable cash flow generation supports long-term financial stability.

Income Statement

Tencent Holdings demonstrates strong profitability with a consistent increase in gross profit and net profit margins over the years. The TTM data shows a gross profit margin of 54.67% and a net profit margin of 29.54%, indicating efficient cost management and strong revenue generation. Revenue growth has been steady, with a 3.44% increase in the TTM period. However, the growth rate has slowed compared to previous years, suggesting potential challenges in maintaining high growth levels.

Balance Sheet

The company's balance sheet is robust, with a low debt-to-equity ratio of 0.37 in the TTM period, reflecting prudent financial leverage. The return on equity is strong at 20.59%, indicating effective use of shareholder funds to generate profits. The equity ratio stands at 55.36%, showcasing a solid capital structure. However, the slight increase in total debt over the years warrants monitoring to ensure it does not impact financial flexibility.

Cash Flow

Tencent's cash flow position is stable, with a healthy operating cash flow to net income ratio of 0.65 in the TTM period. Free cash flow has experienced minor fluctuations, with a slight decline in growth recently, but remains positive. The free cash flow to net income ratio of 0.61 indicates efficient conversion of profits into cash. Continued focus on maintaining strong cash flow generation will be crucial for future investments and debt servicing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	704.16B	660.26B	609.01B	554.55B	560.12B	482.06B
Gross Profit	385.04B	349.30B	293.11B	238.75B	245.94B	221.53B
EBITDA	260.86B	230.09B	183.94B	134.30B	313.65B	238.25B
Net Income	208.00B	194.07B	115.22B	188.24B	224.82B	159.85B
Balance Sheet
Total Assets	2.01T	1.78T	1.58T	1.58T	1.61T	1.33T
Cash, Cash Equivalents and Short-Term Investments	380.44B	343.16B	379.15B	289.48B	262.35B	227.88B
Total Debt	412.49B	358.11B	371.24B	359.14B	323.48B	264.40B
Total Liabilities	810.46B	727.10B	703.57B	795.27B	735.67B	555.38B
Stockholders Equity	1.11T	973.55B	808.59B	721.39B	806.30B	703.98B
Cash Flow
Free Cash Flow	187.40B	162.47B	174.56B	95.24B	113.02B	127.52B
Operating Cash Flow	283.33B	258.52B	221.96B	146.09B	175.19B	194.12B
Investing Cash Flow	-149.15B	-122.19B	-125.16B	-104.87B	-178.55B	-181.96B
Financing Cash Flow	-106.82B	-176.49B	-82.57B	-59.95B	21.62B	13.65B

Tencent Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price79.91

Price Trends

50DMA

79.65

Positive

100DMA

80.56

Negative

200DMA

72.82

Positive

Market Momentum

MACD

0.11

Negative

RSI

54.16

Neutral

STOCH

52.62

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCEHY, the sentiment is Positive. The current price of 79.91 is above the 20-day moving average (MA) of 78.45, above the 50-day MA of 79.65, and above the 200-day MA of 72.82, indicating a bullish trend. The MACD of 0.11 indicates Negative momentum. The RSI at 54.16 is Neutral, neither overbought nor oversold. The STOCH value of 52.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TCEHY.

Tencent Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCEHY	76 Outperform	$708.08B	23.64	20.51%	0.74%	13.39%	31.03%
TME	71 Outperform	$24.82B	17.77	14.47%	1.02%	13.86%	80.97%
BIDU	68 Neutral	$48.45B	48.63	3.31%	―	-2.70%	-56.75%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
JOYY	60 Neutral	$3.38B	-32.88	-2.29%	4.25%	-7.60%	-160.75%
WB	60 Neutral	$2.63B	6.07	12.46%	8.13%	-1.29%	22.48%

* Communication Services Sector Average

Performance Comparison

TCEHY

Tencent Holdings

79.91

32.13

67.24%

BIDU

Baidu

152.26

72.70

91.38%

JOYY

69.31

32.29

87.22%

Weibo

11.22

2.84

33.89%

TME

Tencent Music Entertainment Group

17.74

7.42

71.90%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Nov 20, 2025