Preview in One Chart | Tencent to Announce Earnings on Thursday! Three Core Businesses May Show Steady Growth; Could AI Drive a Valuation Reassessment?

Futu News · Nov 11 17:26

$TENCENT (00700.HK)$ The company is scheduled to release its earnings report at 11:00 PM Beijing Time on November 13. Institutional forecasts predict revenue of RMB 189.139 billion for Q3 2025, representing a year-over-year increase of 13.13%. Earnings per share are expected to reach RMB 5.934, marking a year-over-year rise of 5.14%. (The accounting standards referenced in the above data conform to International Financial Reporting Standards.)

Following the unexpected growth achieved in the second quarter through the deep integration of AI technology with core operations, this quarter’s focus will be on the sustainability of its growth momentum, the progress of AI commercialization, and the potential for improved profitability.

The company's three major business lines are expected to maintain steady growth. Specifically, the gaming segment remains robust under the triple drivers of 'new game releases, stable performance of existing titles, and accelerated overseas expansion'; the advertising business benefits from the acceleration of Video Account monetization and AI-driven enhancements, which could further boost growth rates; the fintech and enterprise services segment is showing signs of accelerated growth as the payment ecosystem expands and cloud business achieves an AI-related inflection point.

I. Gaming Business: Synergy Between New and Existing Titles, Domestic and Overseas Markets Advancing in Tandem

In terms of gaming, the business has formed a triple-driver model comprising 'new game releases, stability of legacy games, and increased momentum overseas.'

The new game 'Delta Force' has demonstrated strong performance in the new season. The HunYuan Game AI model has achieved breakthroughs in NPC decision-making intelligence and automated scene generation, significantly enhancing the gaming experience. On September 21, during its anniversary celebration, the product's daily active users (DAU) surpassed 30 million. It remains among the top-ranked games in internet cafes on PC, showcasing strong user appeal. The new game 'Valorant Mobile' is still in the user ecosystem cultivation phase but holds long-term potential.

Top Internet Cafe Game Popularity Rankings for September 2025

The leading perennial games have remained robust. The tenth-anniversary celebration activities of 'Honor of Kings' yielded significant results, with innovative operational strategies such as free limited-time coupons and collaboration skins featuring Sanxingdui greatly increasing user engagement. Revenue from 'Honor of Kings' is expected to maintain year-on-year growth. 'Peacekeeper Elite' has established a complete content ecosystem loop through its UGC module 'Oasis Genesis.' On August 9, the daily active users of 'Oasis Genesis' exceeded 33 million, forming a virtuous cycle of 'traffic-content-community-channels.'

In overseas gaming, Supercell's classic title *Clash Royale* has recently performed strongly, offsetting some of the decline seen in *Brawl Stars*. *Delta Force* has entered the console market using the GaaS ('free-to-play + in-app purchases') model, marking a key breakthrough in Tencent's globalization strategy. Considering that the global console gaming market exceeds USD 42 billion in size and has long been dominated by overseas IPs in the shooter genre, this move holds significant strategic importance.

II. Advertising Business: Accelerated Commercialization of Video Accounts, AI Enhances End-to-End Efficiency

The advertising business has primarily benefited from the accelerated commercialization of video accounts: both traffic scale and ad load rates have continued to increase. The "content-conversion" closed loop formed by live-stream shopping and mini-program redirection is becoming increasingly mature, with growth mainly driven by direct e-commerce (WeChat Shops), education, self-media, local life services, gaming, and other high-growth sectors.

AI technology is amplifying effectiveness: "Smart Investment AI Creativity" enables personalized content generation, boosting ad conversion rates. Search ads remain robust, benefiting from AI-powered search, which continuously improves traffic and commercial conversion efficiency.

III. Fintech and Enterprise Services: Payment Ecosystem Expansion, Cloud Business Reaches Inflection Point

Globalization of fintech is accelerating, with payment services maintaining steady growth, while wealth management and micro-lending businesses continue to grow at double-digit rates. Notably, Tencent is stepping up its global expansion efforts; “Tenpay Global Checkout” was first launched in the Singapore market, integrating local payment methods via a unified API interface to facilitate overseas users accessing the WeChat mini-program ecosystem.

The cloud business has reached a pivotal turning point, particularly for Tencent Cloud, which has encountered significant development opportunities this quarter. Surging demand for GPU rentals and API token usage is expected to drive cloud business growth significantly higher than the first half of the year. The upgraded release of HunYuan 3D 3.0 generative model further strengthens Tencent Cloud's technological edge in AI-native services, providing professional-grade 3D content creation capabilities for industries such as gaming, film, and e-commerce.

IV. Wall Street Perspective: AI-Driven Valuation Restructuring, Long-Term Value Gains Consensus

As of the end of October 2025, leading investment banks maintain positive ratings on Tencent, with recent target prices concentrated in the HKD 700–750 range, reflecting market recognition of AI-driven growth logic. Key arguments include:

The enabling effects of AI on gaming and advertising are already evident, becoming the "core engine" driving business growth.
Optimization of business structure enhances profitability resilience, with strategies including "globalization of gaming, AI transformation of advertising, and computational enhancement of cloud services."
Valuations have a margin of safety.

Goldman Sachs predicts that Chinese internet giants will experience a 31% year-over-year decline in sector profits in the third quarter due to substantial investments in 'instant retail,' marking the largest drop this year. Among these giants, Tencent is expected to be the only company achieving year-over-year profit growth. The market's focus has now shifted from earnings figures to management guidance on the investment turning point and paths to narrowing losses by 2026. The accelerated growth of cloud business driven by AI remains one of the few bright spots, but this 'future option' is being paid for by current profits.

Options Signals

Tencent’s options market currently exhibits a balance between bullish and bearish forces, with neutral implied volatility. Recent market sentiment has shifted towards a slightly bullish equilibrium. As of 2025/11/11, the put/call ratio stands at 0.68, with implied volatility (IV) at 30.85%, slightly higher than the historical volatility (HV) of 29.9%, indicating a premium expectation for short-term earnings fluctuations in the options market. Over the past five days, IV has oscillated within the range of 28.97%-31.45%, without extreme values. In terms of open interest distribution for options expiring this week, call options are concentrated around the strike price of HKD 680. Attention should be paid to how the clustering of strike prices may influence stock price movements.

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