Saudi Press

Saudi Arabia and the world
Friday, Aug 22, 2025

Tencent vs. Alibaba: Why one Chinese titan is slumping while the other soars

Tencent vs. Alibaba: Why one Chinese titan is slumping while the other soars

Tencent stock (TCEHY) is having its worst day in months after a lackluster earnings report.
Chinese giant Tencent (TCEHY) is in a slump. The company's stock fell 2.3% in Hong Kong on Thursday, making it the day's worst performer on the Hang Seng Index (HSI). It was also Tencent's biggest daily percentage drop in three weeks.

Investors were dispirited by a lackluster earnings report. On Wednesday in New York, the WeChat owner said that net profit for the third quarter dropped 13% compared to a year ago. It partly blamed a slide in revenue from PC games and advertising, particularly on its video streaming platform.

The sluggish performance highlights a divergence between two of China's most valuable tech companies: Tencent's earnings miss comes the same week its longtime rival, Alibaba (BABA), is riding a very public wave of prosperity.

On Monday, Alibaba once again broke its record for Singles Day, the world's biggest annual shopping event that continuously rakes in more than Black Friday and Cyber Monday combined. Two days later, the e-commerce titan confirmed after months of speculation that it would hold a splashy secondary listing in Hong Kong. It aims to raise up to $13.4 billion in what would likely be the world's second-largest public offering this year.

To be clear, the two are fundamentally different companies. Alibaba's core business is e-commerce, while Tencent is primarily known for WeChat, the ubiquitous "super-app" that can be used for anything from social networking to digital payments.

Tencent also has a huge gaming business, which includes popular titles like "PlayerUnknown's Battlegrounds" (PUBG) and "Call of Duty: Mobile."

The two companies have "performed on par historically," internet research analysts at Bernstein have pointed out. In an August research note, they wrote that "over the past 20 years, their earnings and market caps are similar, and both grew at around 30% annually."

But Alibaba's stock has done much better this year, rising 33% compared to Tencent's 3% growth.

Alibaba is also outperforming the broader New York Stock Exchange (NYA) by about 15%, while Tencent has edged the Hang Seng Index (HSI) by 1%.

Bernstein predicted earlier this year that Tencent's revenue will grow slower than Alibaba's for the next three years because the WeChat owner's business is spread out across several segments that are growing at different paces.

"Alibaba grows better because the core business remains strong," they wrote.

Tencent, which is the world's largest gaming company, was hit hard by a regulatory crackdown on the sector in China last year.
While the firm has started to bounce back -it said this week that revenue from online games and smartphone games both increased year-over-year -investors are still wary of further roadblocks. Any "unsuccessful launch of new games" is a major potential risk in the company's outlook, analysts at Jefferies wrote in a note Wednesday.

Tencent has other challenges, such as China's economic slowdown, which has been hurting the online advertising sector. The company was also caught in the NBA's geopolitical crisis in China last month, after a team manager's tweet expressing support for the Hong Kong protests forced its Chinese partners to cut ties with the league. Tencent is the exclusive digital partner for the NBA in China, and canceled the streaming of two preseason games during the controversy.

On Wednesday, Tencent president Martin Lau said that he hopes the NBA problem "resolves itself."

Tencent is also getting dwarfed in an important part of its business: cloud services. While revenue from that unit grew by a whopping 80% in the last quarter, it still came in at 4.7 billion Chinese yuan ($669 million), well below Alibaba's latest intake of 9.3 billion Chinese yuan ($1.3 billion) for its own cloud division.

Overall, however, most analysts remain extremely bullish on Tencent, citing its ability to grow its fintech business and expand mobile gaming as a way to rebound. The average recommendation on the company is "strong buy," according to data provider Refinitiv.

Bernstein analysts said Wednesday that Tencent's mobile gaming and advertising revenue is likely to accelerate in the coming quarters, and its video streaming business should also stage a recovery.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
High-Stakes Trump-Putin Summit on Ukraine Underway in Alaska
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Russia Formally Recognizes Taliban Government in Afghanistan
×