Tencent Q2 2026 Free Cash Flow Negative RMB 13.8 Billion; Excluding AI Prepayments, RMB 37.6 Billion

Tencent released its 2026 interim report. To support model and application iterations, the company significantly expanded computing power procurement. Capital expenditure in the first half reached RMB 84.72 billion, up 82% year-on-year; of which second-quarter capital expenditure alone was RMB 52.784 billion, mainly invested in data centers, servers and other artificial intelligence infrastructure.

In the second quarter of 2026, Tencent Holdings recorded negative free cash flow of RMB 13.8 billion. Net cash generated from operating activities in the quarter was RMB 52.7 billion, which was more than offset by capital expenditure payments of RMB 59.3 billion, media content payments of RMB 5 billion, and lease liability payments of RMB 2.2 billion. Excluding prepayments for computing power procurement, the company's free cash flow in the second quarter was RMB 37.6 billion.

The company's operating cash flow includes significant artificial intelligence-related prepayments, used to provide infrastructure to support the upgrade of the Hy model, the inference needs of WorkBuddy and CodeBuddy, WeChat artificial intelligence initiatives, and the AI capability building of the company's various products and services, while also meeting the growing demand from external customers for cloud services.