Tencent and JD.com Q3 2025 earnings preview: a test of AI monetisation and profitability

Tencent

Tencent will announce its third-quarter results after Hong Kong markets close on Thursday, 13 November 2025.

Key takeaways from Q2 earnings report

Tencent delivered robust financial performance in August, demonstrating 15% year-on-year revenue growth—the strongest pace recorded over the past four years. Operating profit advanced 18% as the operating margin expanded by 1.2 percentage points to 37.5%.

The company's core business segments—gaming and marketing services—both sustained revenue growth exceeding 20%. Domestic games revenue increased 17% while international games surged 35% year-on-year, with flagship titles including Honor of Kings, Peacekeeper Elite, and the newly launched Delta Force demonstrating strong momentum. Marketing services revenue climbed 20% to RMB35.8 billion, propelled by artificial intelligence-powered enhancements to advertising content and targeting capabilities.

Capital expenditures surged 119% to RMB19.1 billion as the company invested substantially in AI infrastructure, including graphics processing units and servers.

Analyst expectations for Q3 results

Market consensus anticipates Tencent will report revenue of RMB188.9 billion for the third quarter, representing 13.0% year-on-year growth, though slightly below the previous quarter's performance.

Net profit attributable to shareholders is projected to advance 7.7%, with the operating margin maintaining the previous quarter's level of 37.5%.

The company's advertising business, Marketing Services, is expected to sustain an 18.7% growth trajectory as AI integration continues to enhance user engagement and sales conversion rates.

Value-added services, encompassing gaming and social networks, remain Tencent's core business segment, accounting for 50% of revenue in Q2. Analysts forecast this segment will grow 12% year-on-year, driven by continued gaming portfolio strength.

What to watch for in Q3 earnings call

• AI monetisation progress and updates on integration into Weixin/WeChat to enhance advertising revenue
• Momentum of the new flagship game Delta Force and the recently launched Valorant Mobile game
• Evidence of AI contributing to gaming revenue generation
• Pace of growth within the international gaming segment
• Progress on capital allocation strategy, including share buybacks and strategic investments

Analyst sentiment reflects optimism on Tencent

Wall Street analysts maintain a constructive view on Tencent. According to LSEG data, 48 out of 52 analysts assign 'buy' or 'strong buy' ratings to the stock. Average price targets have been revised upwards several times this year to reflect the sustained price rally. The latest mean target price stands at HK$703.89, suggesting approximately 8% upside potential from the closing price on 11 November.

Figure 1: Wall Street analyst estimates on Tencent

Technical analysis suggests upside potential

Tencent shares have delivered impressive year-to-date returns of 56%, significantly outperforming both the Hang Seng Index and MSCI China Index.

The technical chart exhibits characteristics of Wave 5 under Elliott Wave Theory. A 100% Fibonacci extension of Wave 1 could see share prices advance to the HK$715 level, although the local peak at HK$683 will form the first resistance level. HK$715 also represents the stock's all-time high.

Conversely, results lacking positive surprises could trigger a pullback towards the 20-day moving average at HK$634. A material disappointment may drive share prices lower towards the support level at HK$590.

Figure 2: Tencent's daily price chart

JD.com

JD.com will also announce its third-quarter results after Hong Kong markets close on Thursday, 13 November 2025.

Key takeaways from Q2 earnings report

JD.com reported revenues of RMB356.7 billion last quarter, representing a 22.4% increase from Q2 2024 and marking the fastest growth rate since Q4 2011. However, profitability faced significant pressure. Net income attributable to ordinary shareholders plunged 50.8% to RMB6.2 billion, reversing the previous upward trend.

An exponential 125% increase in marketing expenses proved a key detractor to profitability. Against the backdrop of weak domestic consumer sentiment, numerous platforms have been reducing product prices or distributing subsidies to attract customers. This intensified competitive environment has created profitability challenges across the sector.

The food delivery business represented another major impact on profitability. Since declaring its entry into this sector—dominated by Meituan—in February, JD Food Delivery has aggressively expanded its presence. Full-time riders exceeded 150,000 in June, and JD now partners with over two million restaurants. The New Businesses segment, which includes food delivery, achieved 198% revenue growth, but operating losses widened twentyfold to RMB14.8 billion as JD heavily subsidised the business to attract and retain both customers and riders.

Beyond the profitability impact, this competitive intensity attracted regulatory attention amid China's deflationary environment. The State Administration for Market Regulation summoned major food delivery platforms, including Meituan, Alibaba and JD.com, urging the companies to cease the escalating price war and adopt more rational practices to protect consumers, merchants and riders.

Analyst expectations for Q3 results

Analysts expect JD.com to report revenue of RMB294.1 billion for the third quarter, representing 12.9% year-on-year growth but a 17.6% sequential decline from the previous quarter, as Q2 performance benefited from the 618 shopping festival.

Net income attributable to shareholders is projected to decline 75.8% year-on-year as the company continues substantial spending on marketing initiatives.

The company's core business, JD Retail, is anticipated to grow steadily at 16.7%. Its established strength in electronics will continue to benefit from government consumption subsidies. The New Businesses segment, including JD Food Delivery, is expected to be a key revenue driver, although it will likely generate losses due to elevated operating and marketing costs.

What to watch for in Q3 earnings call

• Food delivery trajectory and whether management provides indications of profitability by 2026
• Progress addressing concerns around declining net income and lower free cash flow despite strong revenue growth
• Latest data from the Singles' Day shopping festival and core retail margin sustainability amid the highly competitive environment
• Impact of China's stimulus measures on consumer demand
• Updates on international expansion strategy, particularly the recently announced acquisition of German electronics retailer Ceconomy
• Management commentary on FY2025 outlook

Declining analyst sentiments on JD.com

According to LSEG data, 33 out of 36 Wall Street analysts assign 'buy' or 'strong buy' ratings to JD.com ADR shares. However, average price targets have trended downward since March, declining from US$54.0 to the current US$44.6. This still represents material upside potential of 41% from the closing price on 11 November.

Figure 3: Wall Street analyst estimates on JD.com

Technical analysis reveals range-bound trend

Performance of JD.com's shares has been lacklustre in 2025, declining 9% year-to-date as the company faces ongoing profitability challenges.

The technical chart indicates the shares have been trading predominantly sideways between US$30.5 and US$34.5 since mid-May. The 200-day moving average remains flat, indicating limited momentum, while the 20-day moving average is approaching a death cross with the 100-day moving average, suggesting weak near-term price action.

Disappointing earnings results could drive share prices down to the August low of US$29.9. Conversely, positive surprises, such as a clear pathway to profitability in the food delivery business, may catalyse a move towards the top of the trading range at US$34.5.

Figure 4: JD.com's daily price chart