腾讯第一季度：人工智能推动利润增长

TencentHoldingsLtd Rating charles.gou@bernsteinsg.comMin-Joo Kang minjoo.kang@bernsteinsg.comHyrum Caesar ?700.HK hyrum.caesar@bernsteinsg.com Tencent Q1: Al driving profit growth but solidunderthebonnet.RMB196.5bn of Tencent revenue inQ1grew9.1%year onyear.This was slightly light versus our estimate and consensus (RMB197.6bn andRMB199.4bn),though management noted revenue growth would have been 11% but for a late CNY shiftinggaming revenues beyond the end of the quarter.15.0% year on year deferred revenuebalance growth at the end of March should bode well for go-forward growth rates... weestimated c. 15-16% gaming billings growth. Ads revenue grew 19.8% in Q1, versus 17.5%in theprior quarter.Fintech &Business Services (+9.1%)also acceleratedmodestly,withinwhich Business Services (TencentCloud, e-commerce)grew 20%. level non-GAAP operating profit in Q1 rose 9.1% year on year.The company has never hadto maintain a lossmaking"New Businesses"before, buttaking Tencent's Al investmentsdisclosure at face value implied 17.4% year on year growth in core business profits(RMB84.4bn versus RMB71.9bn in Q1 2025).Gaming growth likely continues to moderatesomewhat, but Tencent has ampleroomto raise Video Accounts adloads, while improvedtargeting supports unit pricing.The company pointedto a ramp in capex in H22026 asdomestically produced ASiCs are delivered -which should then mean Tencent Cloud hasmore capacity to service external facing customers. The model building debate will continue,but...Tencent management speaking onthe call noted that alongsidethehy3-previewreleasethecompanyhadrevamped itsdata pipeline, as wellas training/RL/eval infrastructure.We had mixed feelings aboutthe company's use of Openrouter data to justify hy3 popularity. But more importantly,management now expectthe next"substantially better"iteration of the model to land"laterthis year We expect the debate around Tencent's model-building capabilities to persistin the meantime...and deleverage from rising Al spend will continue to weigh on groupearnings in the next few quarters. But there's something to be said about a platform wellpositioned to leverage Al to drive growth, trading on 14x TTM PE. Tencent's Q12026results were ho-hum at firstglance,but solid on closerlook.RMB197bn of revenue implied9.1%growth year on year, while gross profit (RMB111bn) grew 10.7%. Non-GAAP operating profit (our preferred metric for core businessmomentum)reached RMB75.6bn, which was 9.1% higher year on year, implying modest deleverage on operating expenses.Operatingprofits excludingthecompany's disclosure on Al spend grew17.4% year onyear (RMB84.4bnversus RMB71.9bn inQ12025), grew5.9%and 13% (thelatter 14% constant currency) in Q1.Theformer was meaningfully impacted by a CNYdate that wasacouple weeks later year on year.15.0% deferred revenue balance growth this quarter was higher than we'd modeled.2026 willlikelybe aquieter yearfor Tencent's gaming business than the last couple,in terms ofnew launches, but keypillars Delta Forceand Valorant continueto do well. RMB60.Obn),but grossmargin beat versus our estimates and consensus.Within Tencent's expenses this quarter, RMB11.3bnof marketing spend was higher than we'd modeled, while RMB22.5bn of R&D spend was a little lower. Within the latter,RMB16.3bnofstaff R&D expenses werelowerthanwe'dmodelled.Non-staff R&Dexpenses werehigherthanourestimates,butwas lower sequentially. EXHIBIT3:Tencent'sQ1revenuegrew9.1%year on year EXHIBIT4:Tencent reportedgaming revenueofRMB64.2bn in Q12026, 7.9% higher year on year to RMB196.5bn RMB59.9bnlastquarter2022-2026:TencentFBSrevenue RMB38.2bn last quarter, 19.8% higher year on year gross margin further expanded to 56.6% RMB75.6bn in Q1, an increase of 9.1% from a year earlier result of higher operating cash flows2022-2026:Tencentfreecashflowandmargin WerateTencentOutperform(PTHKs780). BERNSTEINTICKERTABLE References to"Bernstein" or the"Firm" in these disclosures relate to the following entities: Bernstein Institutional Services LLC (April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024onwards),SanfordC.Bernstein(HongKong)Limited盛博香港有限公司，SanfordC.Bernstein(Canada)Limited,SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Africa Technologies &Services to produce Bernstein research under a Global Services Agreement inplace between Bernsteinand Societe Generale. otherwise, for purposes of these disclosures, references to Bernstein's“affiliates"relate to both SG and AB and their respectiveaffiliates. userengagementwith itsplatforms,gamingandadvertisingdemandcompetitionwithrivalinternetplatforms,andregulatoryrisks-for example related to China's anti-monopoly regulations. RATINGSDEFINITIONS,BENCHMARKSANDDISTRIBUTION EQUITYRATINGSDEFINITIONS Bernstein brand The Bernsteinbrandrates stocksbased on forecasts of relati