By Sherry Qin

Tencent Holdings is scheduled to report fourth-quarter results on Wednesday. Here is what you need to know:

NET PROFIT: The Chinese videogame and social-media company's quarterly net profit likely jumped 64.5% from a year earlier to 44.46 billion yuan, equivalent to $6.15 billion, according to the consensus estimate of 14 analysts polled by FactSet. Tencent's adjusted net income likely rose 25% to 53.38 billion yuan.

REVENUE: Fourth-quarter revenue is expected to have increased 9.0% to 169.15 billion yuan, supported by solid games and ads revenue. The company's domestic game sales growth likely accelerated to 20% from 14% in the third quarter, driven by a full quarter's contribution from "Delta Force" and strong performances from evergreen titles, HSBC analysts said in a recent note.

Hong Kong-listed shares in Tencent have risen nearly 30% this year amid optimism about China's AI advancements, especially after the tech giant incorporated DeepSeek's large language model in its Weixin superapp in China. Despite a 6.2% fall in the fourth quarter, Tencent's stock jumped 42% in 2024, thanks to the resurgence of its videogame business.

WHAT TO WATCH:

--Tencent recently began testing access to DeepSeek's AI model for searches in Weixin, in addition to its own Hunyuan model, allowing some users to click on AI Search on the search bar within the app. Jefferies analysts described the testing as "an important milestone for Weixin in becoming an AI superapp/agent in the future" in China, while Citi said Tencent has stepped up strategic priorities to fully embrace the accelerated AI transformation. Investors will likely pay attention to management comments on the company's plan to capitalize on the AI opportunities.

--Following the integration of DeepSeek into its cloud services, Tencent could witness faster revenue growth for business services, Citi analysts said in a recent note. Citi expects Tencent to provide an optimistic outlook on capital expenditure during its fourth-quarter earnings call.

--Tencent started repurchasing shares more aggressively last year, with spending on buybacks more than doubling from 2023 to roughly $14.4 billion. Following its aggressive share-buyback plan in January, investors will be looking forward to any additional shareholder-return plans.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

March 18, 2025 02:17 ET (06:17 GMT)

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