(Yicai) Aug. 14 -- Shares of Tencent Holdings climbed to the highest in more than four years after the Chinese internet giant reported a strong financial performance in the second quarter of the year, thanks to the further implementation of artificial intelligence in games and marketing.

Tencent [HKG: 0700] opened 2.4 percent up at HKD600 (USD76.45) today, the highest since April 8, 2021. The stock, which has risen about 45 percent so far this year, retreated soon after and was trading up 1.3 percent at HKD593.50 as of 10.50 a.m.

Net profit widened 17 percent to CNY55.6 billion (USD7.7 billion) in the three months ended June 30, the Shenzhen-based firm said in its second-quarter earnings report released yesterday. Revenue climbed 15 percent to CNY184.5 billion (USD25.7 billion).

The two figures beat market expectations for CNY50.8 billion and CNY178.9 billion, respectively.

“Our games performed well in terms of users and revenue as evergreen games such as Honor of Kings and Peacekeeper Elite evolve into platforms while increasing their usage of AI, and as new games such as Delta Force broke out,” said Pony Ma, Tencent’s chairman and chief executive officer. “Our marketing services revenue sustained rapid growth as we upgraded our advertising foundation model, leading to better performance of advertisements across our traffic platforms.”

Tencent’s gaming revenue from the Chinese market rose 17 percent to CNY40.4 billion in the second quarter from a year earlier, while that from overseas markets soared 35 percent to CNY18.8 billion.

“We deployed AI tools in games to accelerate content production, introduced AI-powered enabling more realistic virtual teammates and non-playable characters, used AI-powered marketing activities to increase user acquisition and engagement, contributing to the popularity and revenue growth of our domestic and international games,” the company said in the earnings report.

Revenue from marketing services grew 20 percent to CNY35.8 billion, and that from financial technology and business services jumped 10 percent to CNY55.5 billion.

Tencent expanded AI capabilities in advertisement creation, placement, recommendation, and performance analysis, enhancing advertising click-through rates and conversions, generating higher returns on investment for advertisers, and growing its platforms’ marketing services revenue, the firm noted.

Tencent’s investment in AI also increased in the second quarter. The company’s capital expenditure soared 119 percent to CNY19.1 billion from a year earlier, up from a 91 percent growth in the first quarter. The money was mainly spent on AI-related infrastructure, such as chips and data centers.

Tencent has enough chips to train and continuously upgrade its AI models, President Martin Lau said during the earnings conference call. The firm is improving the inference efficiency of AI through extensive software-level optimizations to be able to carry out more workloads but with the same number of chips, he added.

Editors: Dou Shicong, Futura Costaglione