Review|Tencent NDR:AI Agents Powered by WeChat’s Mini Program Are Imminent

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Tencent’s quarterly results largely aligned with our previouw estimates across key segments such as advertising and gaming. As related analysis has already been widely covered by the market, we won’t elaborate further here.

Preview|Tencent 1Q25:AI Tailwind Starts to Become Visible in Advertising Business

I reviewed Tencent's quarterly NDR and believe that Tencent's executives have developed a more mature understanding and approach to the implementation of AI, especially in the development of AI agents within WeChat. They articulated their core strategies very clearly. For a company like Tencent, which primarily focuses on bottom-up product development, the next step will be resource allocation to address engineering challenges. It’s likely that the AI agents within WeChat—whether it’s an upgraded version of the Yuanbao (WeChat mini-program) or a more native AI agent integrated with WeChat’s core capabilities—will be launched sooner than expected.

Beyond our Tencent analysis, we will release a SNOW Preview tomorrow, followed by a Fintech research report on Wednesday.

AI + Advertising: Tencent’s Approach Mirrors Meta’s

Current state: AI has become the second-largest driver of ad revenue

growth

Tencent identified two primary growth drivers and one secondary factor for advertising in Q1:

• The main contributors were the rapid increase in traffic from video accounts, as well as growing user engagement across Mini Programs and Official Accounts—segments that now represent a substantial portion of Tencent’s ad revenue base.

• Another key driver was AI-powered optimization, which improved ad inventory click-through rates.

• The secondary factor was a structural improvement: Tencent increased video account ad load from 2–3% to 3–4% starting in August last year. As a result, the company saw a full-quarter benefit in Q4 and continued tailwinds into Q1.

Outlook: AI to deliver above-consensus growth and sustain momentum

• Looking ahead, management expects ad revenue growth to outpace market expectations, primarily driven by AI. Tencent plans to continue leaning on both traffic momentum and AI-driven optimization

• The company also emphasized its disciplined approach to scaling ad load, choosing the right timing to further expand only when appropriate.

AI Agent: Compared to the Previous NDR, Management Provided More Granular and Actionable Insights, Especially Around Access Privileges