Tencent Holdings Ltd. posted its fastest revenue growth in more than a year after a string of gaming hits helped China’s most valuable company weather a lingering economic downturn, reported by Bloomberg.

Revenue for the three months ended December rose to 172.5 billion yuan ($23.8 billion), compared with an average estimate of 168.7 billion yuan. Net profit for the period was 51.3 billion yuan, compared with a forecast of 43.9 billion yuan. The company also announced plans to buy back at least 80 billion Hong Kong dollars worth of shares by 2025 and proposed a 32% increase in its annual dividend.

Delta Force

The world’s largest game publisher reached its peak last year with games from Nexon Co. Dungeon & Fighter Mobile to its own PC shooter Delta Force — games it aims to turn into so-called evergreen franchises that can generate steady cash. That could help take the heat off other parts of Tencent’s internet portfolio, where businesses like advertising and payments are struggling with cautious consumer spending.

Tencent is one of several top Chinese tech names reporting this week, capping an earnings season for the trillion-dollar sector that is nearing its end. Last month, President Xi Jinping met with prominent entrepreneurs, including Tencent Chairman Pony Ma and Alibaba Group Holding Ltd. co-founder Jack Ma, signaling a softening of Beijing’s stance on the private sector, which it has been attacking for three years. A new generation of founders representing industries like chipmaking, electric vehicles and artificial intelligence were also in attendance, echoing Xi’s priorities in the tech showdown with the United States.

Tencent and AI

Chinese AI took the global spotlight earlier this year after Hangzhou-based DeepSeek launched an AI model that rivals OpenAI but requires far fewer computing resources. The Chinese startup’s R1 has sparked deep thought among Chinese tech giants, who are ramping up similar model upgrades or investing in AI infrastructure. Alibaba has pledged to spend more than $50 billion on its AI and cloud computing networks over the next three years, declaring its primary goal to create human-like AI capabilities.

The firm risks disappointing the bullish consensus, as we doubt the company will generate significant additional revenue from AI this year. Tencent faces a more challenging 2025 as the US could impose new sanctions following the US Department of Defense’s decision to blacklist the company in January. A deepening economic downturn is another risk, though Tencent is better positioned to navigate it than its Internet and e-commerce peers. Tencent’s earnings momentum is normalizing this year after an exceptional 2024, with earnings per share growth slowing to a low double-digit percentage range in 2025, compared to about 37% last year.