Tencent Holdings (00700.HK) reported that its free cash flow for the second quarter of 2026 stood at a negative RMB 13.8 billion. This outcome was largely attributable to the fact that the net cash generated from operating activities, which amounted to RMB 52.7 billion, was substantially outweighed 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.
Notably, the operating cash flow included substantial advance payments related to AI. These payments were earmarked for establishing infrastructure to bolster the upgrade of the Hy model, cater to the inference requirements of WorkBuddy and CodeBuddy, drive WeChat AI initiatives, and enhance the AI capabilities embedded in various products and services offered by the group. Additionally, these investments aimed to keep pace with the escalating demand for cloud services from external clients.
However, when excluding the advance payments specifically allocated for computing power procurement, Tencent Holdings' free cash flow for the quarter climbed to a positive RMB 37.6 billion.