Tencent's full-throttle push into AI infrastructure is showing up in its books: capital expenditure nearly tripled year-on-year in the second quarter to RMB 52.8 billion (about $7.4 billion), up 176%, as the Chinese internet giant bets heavily on compute for its Hunyuan models and AI products.
Revenue rose 11% to RMB 204.8 billion in Q2 2026, with gross profit up 13% to RMB 118.4 billion, Tencent said on August 12. Non-IFRS net profit attributable to shareholders was RMB 68.4 billion, up 9%. But the capex surge pushed the company into negative free cash flow of RMB 13.8 billion for the quarter — although excluding prepayments for compute procurement, free cash flow would have been RMB 37.6 billion, underscoring just how much cash is being parked in AI hardware orders.
CEO Ma Huateng framed the spending as the foundation of a new "AI-empowered Tencent," pointing to the production release of the Hy3 model in July, which he said has ranked among the top three models globally by token consumption on OpenRouter since July 7. At the application layer, the WorkBuddy office AI and CodeBuddy coding assistant are seeing "breakout" user growth, and Tencent has begun a small-scale prototype test of Xiaowei, an agentic AI inside Weixin powered by a custom model called WeLM.
The spending spree comes amid a broader Chinese AI investment wave: analysts at Goldman Sachs have forecast Tencent's capex could reach RMB 165 billion in 2027 — more than double 2025 levels — as rivals like Alibaba also ramp up despite chip supply constraints.
