Tencent cites AI chip shortages as cloud growth bottleneck

• Company says it will lower 2025 capex guidance compared with previous forecasts, though spending will still exceed 2024 levels
• Tencent posted Q3 revenue of 192.9 billion yuan, buoyed by a 15% rise in domestic gaming revenue and a 43% surge in global gaming, as well as a 21% jump in advertising driven by AI-enhanced targeting.

Tencent Holdings said on Thursday that a shortage of advanced artificial intelligence chips is limiting the expansion of its cloud business, as China’s tech giants feel the strain of ongoing US export restrictions.

Following strong third-quarter results, Tencent President Martin Lau acknowledged that supply constraints mean the company is allocating available AI compute power first to internal AI initiatives, rather than renting it out to external clients.

“One constraint of the cloud business growth is the availability of AI chips. When AI chips are actually in short supply, we actually prioritise internal use,” Lau said in a post-earnings call.

He added, “If there is not an AI chip supply constraint, our cloud revenue should be growing more,” highlighting the impact of tightened US rules affecting supplies from top vendors such as Nvidia .

Tencent posted Q3 revenue of 192.9 billion yuan ($27.08 billion), buoyed by a 15 per cent rise in domestic gaming revenue and a 43 per cent surge in global gaming, as well as a 21 per cent jump in advertising driven by AI-enhanced targeting.

Bets big on AI

Net profit climbed well above analyst estimates to 63.1 billion yuan. The company did not break out individual cloud results, but the broader FinTech and Business Services segment, which includes cloud, grew 10 per cent.

Tencent’s capital expenditure for the quarter totaled 13 billion yuan ($1.83 billion), down 24 per cent year-on-year. The company signaled it will lower 2025 capex guidance compared with previous forecasts, though spending will still exceed 2024 levels. AI-focused investments are expected to account for a “low teens” percentage of revenue next year.

Facing intensifying local competition, Tencent has bet big on AI as the next growth engine, integrating advanced models—including DeepSeek’s—across platforms like WeChat and launching Yuanbao, a leading ChatGPT-style AI assistant.

The company’s efforts underscore both the transformative promise and logistical hurdles of large-scale AI adoption in the current geopolitical environment.