Tencent, China’s leading technology giant, has reported a strong 13% year-on-year rise in first-quarter revenue, reaching 180 billion yuan ($24.97 billion) for the period ending March 31, 2025. The revenue growth was fueled by strong performance in its gaming sector and enhanced advertising driven by artificial intelligence (AI). This result surpassed analysts’ expectations, who had forecasted revenue of 174.6 billion yuan.

Despite a slight shortfall in net profit expectations, Tencent’s quarterly net profit stood at 47.8 billion yuan, falling short of the anticipated 52.2 billion yuan. However, the company’s gaming sector was the key growth driver, benefiting from recent regulatory relaxations in China’s gaming industry following years of stringent restrictions. Domestic gaming revenue grew by 24%, totaling 42.9 billion yuan, while international gaming revenue increased by 23%, amounting to 16.6 billion yuan.

Notable titles contributing to Tencent’s gaming growth include “Dungeon & Fighter Mobile” and the shooting game “Delta Force”, both of which have resonated strongly with users since their respective launches in 2024.

In addition to gaming, Tencent has significantly ramped up its investments in AI. The company has allocated a significant portion of its 2025 revenue for AI-focused capital expenditure, following a 39 billion yuan spend on AI development in Q4 2024. Tencent also introduced its proprietary large language model Hunyuan, with a public release of version T1 in March.

Tencent continues to lead innovation in AI by integrating third-party technologies, notably partnering with DeepSeek, a Chinese AI startup. This integration has been rolled out across Tencent’s core products, including WeChat, the popular messaging and payment platform, and Yuanbao, Tencent’s own AI assistant.

Tencent’s advertising revenue surged 22% year-on-year to 17.7 billion yuan, benefiting from AI-driven ad tech advancements that enhance targeting capabilities. Moreover, its FinTech and Business Services segment, covering services like consumer loans, wealth management, and cloud services, saw a 16% increase in revenue, reaching 27.6 billion yuan.

Tencent’s performance highlights the ongoing growth of China’s tech sector, particularly in the gaming and AI industries, which are increasingly seen as critical drivers of future success.