Tencent Holdings (TCEHY) AI Stock Analysis

• Market Cap: $720.69B
• Dividend Yield: 0.63%
• Average Volume (3M): 37.52K
• Price to Earnings (P/E): 24.0
• Beta (1Y): 0.33
• Revenue Growth: 13.39%
• EPS Growth: 31.03%
• Country: US
• Employees: 110,558
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 1.07
• Shares Outstanding: 9,144,876,000
• 10 Day Avg. Volume: 112,568
• 30 Day Avg. Volume: 37,522
• 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: 1.11
• Enterprise Value/Revenue: 1.13
• Enterprise Value/Gross Profit: 2.07
• Enterprise Value/Ebitda: 3.06
• 1Y Price Target: $102.00
• Price Target Upside: 28.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 3.9
• Revenue Forecast (FY): $105.78B

• Rating: 76 Outperform
• Price Target: $91.00 ▲(14.41% 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 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	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: Neutral
• Last Price: 79.54
• 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 Neutral. The current price of 79.54 is below the 20-day moving average (MA) of 81.12, below the 50-day MA of 82.33, and above the 200-day MA of 71.03, indicating a neutral trend. The MACD of -0.81 indicates Positive momentum. The RSI at 43.05 is Neutral, neither overbought nor oversold. The STOCH value of 36.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TCEHY.

Tencent Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCEHY	76 Outperform	$720.69B	23.99	20.51%	0.63%	13.39%	31.03%
TME	71 Outperform	$25.99B	18.88	14.47%	0.98%	13.86%	80.97%
BIDU	64 Neutral	$40.81B	37.02	3.07%	―	-3.07%	-60.21%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
JOYY	60 Neutral	$3.23B	―	-2.29%	4.41%	-7.60%	-160.75%
WB	60 Neutral	$2.50B	5.94	12.46%	7.98%	-1.29%	22.48%

Tencent Holdings Corporate Events

Tencent Holdings Reports Strong Q3 2025 Financial Results

Tencent Holdings, a leading Chinese multinational conglomerate, operates primarily in the technology and entertainment sectors, offering services in social media, gaming, and fintech. The company has reported strong financial performance for the third quarter of 2025, with significant growth in revenue and profit driven by its gaming, marketing services, and fintech operations. Key financial metrics showed a 15% year-on-year increase in revenue to RMB192.9 billion and a 19% rise in profit attributable to equity holders to RMB63.1 billion. The company also highlighted strategic investments in AI, which have enhanced ad targeting and game engagement, contributing to its robust performance. Looking ahead, Tencent remains focused on leveraging its AI capabilities and expanding its gaming and fintech services to sustain growth.

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.