Tencent Holdings (TCEHY) AI Stock Analysis

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Tencent Holdings

(OTC:TCEHY)

Rating:81Outperform

Price Target:

$87.00

▲(13.06% Upside)

Tencent Holdings scores highly due to its strong financial performance and positive earnings call, which highlight robust growth in key segments like gaming and AI-enhanced advertising. The technical analysis indicates positive momentum, although overbought conditions suggest caution. The valuation is moderate, with a P/E ratio reflecting growth expectations but a low dividend yield. Overall, Tencent is well-positioned for continued growth, supported by strategic investments in AI and cloud services.

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

Market Cap

$695.31B

Dividend Yield0.75%

Average Volume (3M)301.58K

Price to Earnings (P/E)24.3

Beta (1Y)0.36

Revenue Growth11.83%

EPS Growth39.62%

CountryUS

Employees110,558

SectorCommunication Services

Sector Strength89

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.95

Shares Outstanding9,172,281,000

10 Day Avg. Volume179,486

30 Day Avg. Volume301,579

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap0.88

Enterprise Value/Revenue0.90

Enterprise Value/Gross Profit1.67

Enterprise Value/Ebitda2.55

Forecast

1Y Price Target

$77.00

Price Target Upside0.06% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

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 several key avenues. The largest portion of its income comes from online gaming, where it owns popular titles and has stakes in various game developers, both domestically and internationally. Additionally, Tencent earns significant revenue from social networks, primarily through advertising on platforms like WeChat and QQ. Its digital content services, including music and video streaming, contribute to its earnings through subscriptions and advertising. The fintech and business services segment, which encompasses mobile payment solutions like WeChat Pay and cloud computing services, also plays a crucial role in revenue generation. Strategic partnerships with global companies and investments in emerging tech startups further bolster its financial performance, allowing Tencent to diversify its income sources and tap into new markets.

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:

Main Street Data

Tencent Holdings Earnings Call Summary

Earnings Call Date:Aug 13, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 12, 2025

Earnings Call Sentiment Positive

The earnings call highlighted Tencent's strong financial performance, driven by significant growth in gaming and marketing services revenue, as well as successful AI integration. Despite some challenges in other losses and long-form video subscriptions, the overall results indicate a positive trend.

Q2-2025 Updates

Positive Updates

Double-Digit Revenue and Profit Growth

Total revenue for Q2 2025 was RMB 185 billion, up 15% year-on-year. Gross profit was RMB 105 billion, up 22% year-on-year. Non-IFRS operating profit was RMB 69 billion, up 18% year-on-year.

Gaming Success

Domestic games revenue grew by 17% year-on-year. International games revenue increased by 35% year-on-year. Delta Force became a top 5 game by DAU in China.

AI and Marketing Services Growth

Marketing services revenue grew 20% year-on-year to RMB 36 billion, benefiting from AI-powered adtech upgrades.

Cloud Recognition and Growth

Gartner recognized Tencent Cloud as a top communication platform as a service solution globally for the third consecutive year.

Increased Subscriber Base

Music subscription revenue increased 17% year-on-year, with overall subscribers growing 6% year-on-year to 124 million.

Negative Updates

Other Losses and Increased Finance Costs

Other loss was RMB 3.6 billion compared to a gain of RMB 1.5 billion the previous year, mainly due to lower subsidies and tax rebates, and increased finance costs by 27% year-on-year.

Challenges with Long-form Video

Long-form video subscription revenue decreased 2% year-on-year, with video subscribers declining 3% year-on-year to 114 million.

Company Guidance

During Tencent Holdings Limited's 2025 Second Quarter Results Announcement Webinar, the company reported a robust financial performance, with total revenue reaching RMB 185 billion, a 15% increase year-on-year. Gross profit rose by 22% to RMB 105 billion, and non-IFRS operating profit grew by 18% to RMB 69 billion. Notably, the non-IFRS net profit attributable to equity holders increased by 10% to RMB 63 billion. Tencent's key services, including gaming, social networks, and marketing services, showed significant growth. Communication platforms like Weixin and WeChat saw their monthly active users grow to 1.4 billion. The company's gaming segment experienced a 17% rise in domestic games revenue, while international games revenue surged by 35% year-on-year. Tencent also highlighted the increasing role of AI in their operations, contributing to advancements in advertising and gaming content. The company is strategically investing in AI capabilities, which is evident from the 149% year-on-year increase in operating CapEx, reaching RMB 17.9 billion. The firm's commitment to leveraging AI for enhancing user experience and operational efficiency was a key theme throughout the call.

Tencent Holdings Financial Statement Overview

Summary

Tencent Holdings demonstrates strong financial health with impressive profitability margins and revenue growth. The balance sheet is stable, with a good balance between debt and equity, and the company maintains robust cash flows despite a slight decline in Free Cash Flow Growth. Overall, the company is well-positioned in the Internet Content & Information industry, with strong financial metrics supporting its growth and profitability.

Income Statement

Very Positive

Tencent Holdings shows robust revenue growth with a Revenue Growth Rate of 8.41% from 2023 to 2024. The Gross Profit Margin stands at a healthy 52.89%, and the Net Profit Margin is strong at 29.39%. EBIT Margin and EBITDA Margin are also impressive at 31.52% and 46.97%, respectively, indicating solid operational efficiency and profitability.

Balance Sheet

Very Positive

The company's Debt-to-Equity Ratio is 0.37, reflecting a prudent use of leverage. Return on Equity (ROE) is high at 19.94%, showcasing effective management of equity to generate profits. The Equity Ratio is 54.67%, indicating a stable financial structure with more assets funded by equity than debt.

Cash Flow

Very Positive

Tencent's Free Cash Flow Growth Rate is -6.94%, slightly declining from the previous year but still maintaining a strong Free Cash Flow. The Operating Cash Flow to Net Income Ratio is 1.33, and the Free Cash Flow to Net Income Ratio is 0.84, both indicating strong cash generation relative to its earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	680.78B	660.26B	609.01B	554.55B	560.12B	482.06B
Gross Profit	365.92B	349.30B	293.11B	238.75B	245.94B	221.53B
EBITDA	239.35B	230.09B	183.94B	134.30B	313.65B	238.25B
Net Income	200.00B	194.07B	115.22B	188.24B	224.82B	159.85B
Balance Sheet
Total Assets	1.92T	1.78T	1.58T	1.58T	1.61T	1.33T
Cash, Cash Equivalents and Short-Term Investments	377.94B	343.16B	379.15B	289.48B	262.35B	227.88B
Total Debt	404.64B	358.11B	371.24B	359.14B	323.48B	262.46B
Total Liabilities	795.34B	727.10B	703.57B	795.27B	735.67B	555.38B
Stockholders Equity	1.04T	973.55B	808.59B	721.39B	806.30B	703.98B
Cash Flow
Free Cash Flow	192.33B	162.47B	174.56B	95.24B	113.02B	127.52B
Operating Cash Flow	263.06B	258.52B	221.96B	146.09B	175.19B	194.12B
Investing Cash Flow	-83.76B	-122.19B	-125.16B	-104.87B	-178.55B	-181.96B
Financing Cash Flow	-136.16B	-176.49B	-82.57B	-59.95B	21.62B	13.65B

Tencent Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price76.95

Price Trends

50DMA

69.79

Positive

100DMA

66.40

Positive

200DMA

61.35

Positive

Market Momentum

MACD

2.13

Positive

RSI

65.38

Neutral

STOCH

35.21

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 76.95 is above the 20-day moving average (MA) of 74.92, above the 50-day MA of 69.79, and above the 200-day MA of 61.35, indicating a bullish trend. The MACD of 2.13 indicates Positive momentum. The RSI at 65.38 is Neutral, neither overbought nor oversold. The STOCH value of 35.21 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	81 Outperform	$695.31B	24.30	21.04%	0.75%	11.83%	39.62%
TME	79 Outperform	$39.69B	26.55	14.07%	0.73%	10.66%	84.89%
BIDU	75 Outperform	$31.53B	8.75	10.33%	―	-1.32%	42.56%
MOMO	73 Outperform	$1.33B	7.80	12.39%	―	-11.02%	-5.17%
WB	71 Outperform	$2.76B	8.12	10.77%	7.16%	1.49%	14.94%
Sector *	60 Neutral	$44.01B	4.13	-12.81%	4.14%	1.86%	-42.71%
JOYY	59 Neutral	$2.78B	―	-2.33%	3.18%	-6.82%	-150.90%

* Communication Services Sector Average

Performance Comparison

TCEHY

Tencent Holdings

76.95

28.84

59.95%

BIDU

Baidu

96.29

12.88

15.44%

JOYY

58.74

25.84

78.54%

Weibo

11.27

4.67

70.76%

MOMO

Hello Group

8.29

2.22

36.57%

TME

Tencent Music Entertainment Group

24.55

14.33

140.22%

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: Aug 19, 2025