Tencent Holdings to Step Up Capex on AI

Chinese social media giant Tencent Holdings Limited, a world-leading Internet and technology company, said that it has stepped up its AI investments to meet the internal business needs, train foundation models and support surging demand for inference that they were experiencing from the users.

Tencent also intends to further increase its capital expenditures in 2025 as these investments will generate good economic returns and value. It said that the company has the capacity and intention to continue returning capital to shareholders.

For 2025, Tencent proposes to increase our annual dividend by 32%, to $0.58 per share (equivalent to approximately $5.28 billion), and plan to repurchase at least $10.3 billion worth of the company’s shares.

Announcing the financial results for 2024, Tencent has reported a revenue of $91.9 billion in 2024, up 8% compared with the previous year and the company’s gross profit grew by 19% to $48.6 billion y-o-y. The company also said that its operating profit was $33.1 billion, up 24% y-o-y. The profit attributable to company’s equity holders in 2024 was $31 billion.

Chairman and CEO of Tencent Pony Ma Huateng said that benefitting from AI-powered enhancements to their advertising platform, higher engagement in Video Accounts, and growth in evergreen games, the company achieved double digit revenue growth while sustaining continued operating leverage in the fourth quarter of 2024.

“Starting a few months ago, we have reorganised our AI teams to sharpen focus on both fast product innovation and deep model research, increased our AI-related capital expenditures, and increased our R&D and marketing efforts for our AI-native products. We believe these stepped-up investments will generate ongoing returns via uplifting productivity in our advertising business and longevity of our games, as well as longer term value from accelerated consumer usage of our AI applications and enterprise adoption of our AI services,” he said.

During 2024, the Company repurchased approximately 307 million shares on the Hong Kong Stock Exchange for a consideration of approximately $14.41 billion.

Tencent Video maintained its leading position in China’s long-form video market with 113 million video subscribers. Tencent Music extended its industry leadership in China’s music streaming market with 121 million music subscribers.

The company’s revenue for Q4-2024 was $24 billion, up 11% over the fourth quarter of 2023 and the gross profit was $12.6 billion), up 17% y-o-y.

Tencent has been looking for new growth opportunities amid its push for the adoption of its self-developed Hunyuan large language model across various industries, while also building out AI infrastructure for enterprise clients.

Earnings Call

During an Earnings’ call with analysts, Tencent president Martin Lau Chi-ping said that the company had increased its purchase of graphics processing units in the past quarter to meet internal demands and enhance its cloud computing services.

The decision contributed to a more than threefold rise in capital expenditure last year, reaching $10.7 billion, which represents around 12% of the company’s revenue, the South China Morning Post said.