Tencent Holdings (TCEHY) AI Stock Analysis

• Market Cap: $738.45B
• Dividend Yield: 0.7%
• Average Volume (3M): 139.31K
• Price to Earnings (P/E): 25.9
• Beta (1Y): 0.33
• Revenue Growth: 11.83%
• EPS Growth: 39.62%
• Country: US
• Employees: 110,558
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.95
• Shares Outstanding: 9,144,770,500
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 139,306
• PEG Ratio: 0.26
• Price to Book (P/B): 3.70
• Price to Sales (P/S): 5.45
• P/FCF Ratio: 22.14
• Enterprise Value/Market Cap: 0.83
• Enterprise Value/Revenue: 0.87
• Enterprise Value/Gross Profit: 1.58
• Enterprise Value/Ebitda: 2.34
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: $92.00 ▲(13.89% Upside)

Tencent Holdings' strong financial performance and positive earnings call are the most significant factors driving the score. The company's strategic investments in AI and cloud services indicate a promising future, although the high valuation and mixed technical indicators suggest caution. The absence of notable corporate events further emphasizes the importance of financial and strategic factors in the overall assessment.

Tencent Holdings Business Overview & Revenue Model

Company Description

Tencent Holdings Limited is a Chinese multinational conglomerate holding company with subsidiaries in various internet-related services and products, entertainment, AI, and technology. Founded in 1998, Tencent is best known for its messaging platform WeChat and its online gaming division, which is one of the largest in the world. The company operates across multiple sectors, including social networks, online gaming, digital content, fintech, and cloud services, making it a key player in the Chinese and global digital economy.

How the Company Makes Money

Tencent 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 Financial Statement Overview

Summary

Tencent Holdings demonstrates strong financial health with high profitability, efficient cost management, and a solid capital structure. Despite a slowdown in revenue growth, the company maintains stable cash flow generation, crucial for future investments and debt servicing.

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	262.46B
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 Price: 80.78
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 80.78 is below the 20-day moving average (MA) of 81.43, below the 50-day MA of 82.14, and above the 200-day MA of 68.82, indicating a neutral trend. The MACD of -0.12 indicates Positive momentum. The RSI at 48.42 is Neutral, neither overbought nor oversold. The STOCH value of 27.37 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCEHY	77 Outperform	$738.45B	25.89	21.04%	0.70%	11.83%	39.62%
TME	75 Outperform	$31.32B	23.04	14.07%	0.85%	10.66%	84.89%
BIDU	67 Neutral	$44.00B	11.57	10.33%	―	-1.32%	42.56%
WB	66 Neutral	$2.58B	7.39	10.77%	7.85%	1.21%	14.72%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
JOYY	59 Neutral	$3.06B	―	-2.32%	4.72%	-7.07%	-150.40%
MOMO	51 Neutral	$1.08B	10.27	7.65%	―	-7.33%	-34.16%

Tencent Holdings Corporate Events

Tencent’s Earnings Call: Strong Growth and AI Integration

Tencent Holdings’ recent earnings call painted a picture of robust financial health, underscored by significant growth in gaming and marketing services revenue. The integration of AI technologies has been a notable success, contributing to the company’s positive trajectory. Despite facing challenges in other losses and long-form video subscriptions, the overall sentiment from the call was optimistic, reflecting a strong performance and strategic advancements.

Tencent Holdings Reports Strong Q2 2025 Earnings Growth

Tencent Holdings Limited, a leading Chinese technology conglomerate, operates in the internet services sector, offering a wide range of services including social networking, gaming, fintech, and cloud services. The company is renowned for its popular platforms such as WeChat and QQ, as well as its extensive gaming portfolio.