Tencent’s Sales Rebound Though Concerns Persist on China Outlook

Tencent Holdings Ltd. posted its fastest pace of revenue growth in more than a year but earnings missed estimates, reflecting an uneven internet sector recovery during China’s post-pandemic reopening.

China’s most valuable company grew online advertising by 17% as a gradual resumption of marketing fuels the business for sector leaders including Baidu Inc. Yet analysts had projected a sharper bounceback as the world’s No. 2 economy let down years of Covid Zero barriers. Tencent’s shares slid as much as 3.9% in Hong Kong.

Investors remain cautious after a year during which Tencent and its peers barely grew after regulatory crackdowns and Covid restrictions choked off the consumer and corporate spending. Mainstay internet businesses like advertising and gaming are only now emerging from their historic trough, while big tech firms have been forced to push aggressive cost cuts to endure an uncertain macroeconomic environment.

To revitalize the business, Tencent aims to integrate artificial intelligence capabilities across its suite of products from WeChat to online media, calling the technology a “growth multiplier.” ChatGPT, now a global phenomenon, triggered a race among Chinese tech firms to catch up. But the Shenzhen-based firm appears to lag behind rivals like Alibaba Group Holding Ltd. and Baidu, both of which have announced ChatGPT-style platforms and triggered a frenzy among investors.

President Martin Lau joined a number of technology executives — including OpenAI’s Sam Altman — in publicly welcoming regulation of the burgeoning space, in China or elsewhere. The company has been careful to stress its compliance with Beijing’s guidelines since gaming crackdowns of past years threatened to sap its business.