Tencent Holdings reported 2026 second-quarter revenue of 204.79 billion yuan, up 11% from a year earlier and slightly ahead of market expectations, as gaming, advertising and business services all expanded. Non-IFRS (excluding certain one-off and non-cash items) net profit rose 9% to 68.4 billion yuan, while profit attributable to equity holders increased 0.7% to 56.022 billion yuan. Capital expenditure surged 176% to 52.78 billion yuan, well above the market forecast of 32.14 billion yuan, mainly due to investment in AI infrastructure. That spending pushed quarterly free cash flow to negative 13.8 billion yuan, though Tencent said free cash flow would have been 37.6 billion yuan excluding prepayments for AI computing capacity purchases. Value-added services revenue climbed 8% to 98.4 billion yuan, with domestic games revenue rising 17% to 47.3 billion yuan helped by Delta Force, Valorant and Rock Kingdom: World. International games revenue fell 0.8% to 18.6 billion yuan because of exchange-rate effects, but grew 4% on a constant-currency basis. Marketing services revenue increased 22% to 43.6 billion yuan, the fastest-growing segment, while fintech and business services revenue rose 9% to 60.3 billion yuan. The earnings report also highlighted AI products, saying WorkBuddy recorded rapid user growth, healthy retention and strong willingness to pay, supported by agent orchestration (coordination of AI agents) engineering, broad model choice and a leading skills library. Tencent said the official release of Hunyuan Hy3 generated more than 68 times the call volume of the previous generation within a week of launch and continued to rank among the global top three by OpenRouter token consumption, with the larger-parameter Hy4 planned for release soon. Inside WeChat, the AI agent Xiaowei has begun limited gray testing (small-scale phased testing). Excluding contributions from new AI products, Non-IFRS operating profit rose 19% year on year to 86.1 billion yuan. By the end of the quarter, net cash had fallen to 58.2 billion yuan from 146.9 billion yuan at the end of March.