Tencent Shares Fall Amid Profit Slowdown Concerns

By Sherry Qin

Tencent shares fell sharply on Chinese company's plans to more than double its AI investment this year, prompting concerns about slower profit growth.

Shares of the Chinese gaming and social media company fell 6.1% to 517 Hong Kong dollars on Thursday morning. The stock was on track for its largest daily percentage decline since last April. The decline outpaced the Hang Seng Index's 1.6% fall and the Hang Seng Tech Index's 1.5% drop.

Tencent spent 18 billion yuan, equivalent to US$2.62 billion, on AI investments last year. The company has so far focused on leveraging AI to boost productivity and reduce costs across various businesses, helping it to deliver a fifth-straight quarter of double-digit growth in both revenue and profit.

The WeChat operator said Wednesday that fourth-quarter net profit rose 13.5% to 58.26 billion yuan while its revenue climbed 13%.

Analysts reckon that the sharply higher AI investment plan could mean slower profit growth than revenue growth. Bernstein analysts estimate that Tencent could post a mid-to-high single-digit operating profit growth in 2026 after a 16% gain in 2025.

Goldman Sachs analysts reckon that any earnings multiple repair will likely hinge on the development of Tencent driving faster core businesses growth with AI and progress on its AI models and other AI products over the next few quarters.

Still, analysts believe the more aggressive spending plan is a positive move for Tencent. Despite not being a first mover in the AI competition in China, "it has a proven history of entering markets later than industry incumbents and ultimately emerging as a leader," Citi analysts said in a note.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

March 19, 2026 00:24 ET (04:24 GMT)