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Shares of the Chinese tech company declined in both Hong Kong and U.S. markets following a significant drop in net profit for the fourth quarter, primarily due to increased marketing costs for online gaming.
In Hong Kong, the stock closed down 4.1% at HKD187 (roughly USD23.90), whereas in the U.S., the shares on the NASDAQ fell 4.1% to USD118.50 yesterday. For the quarter ending December 31, the firm reported a net profit of CNY6.2 billion (about USD892.6 million). Its revenue increased slightly by 3% year-over-year, reaching CNY27.5 billion (approximately USD3.9 billion).
Revenue from gaming and other value-added services went up 4% to CNY22 billion. Income from the online education platform Youdao and the music streaming service Cloud Music grew 17% and 5%, reaching CNY1.6 billion and CNY2 billion respectively. Operating expenses jumped 11% compared to the previous year, totaling CNY9.4 billion, predominantly due to higher marketing expenditures for online games.
The company’s founder and CEO stated, “We closed 2025 with another strong quarter, demonstrating the resilience of our long-term gaming operations and the increasing influence of our global titles.” He added, “Artificial intelligence has become a core aspect of our development and operation strategies. We’re integrating AI throughout our game creation and gameplay processes, which is already enhancing efficiency and creating new interactive experiences that were previously unattainable.”
During the quarter, the revenue was driven by popular titles like Fantasy Westward Journey Online, along with newly released games Where Winds Meet and Marvel Rivals.
The gaming industry is currently abuzz with debate over artificial intelligence. Earlier this month, Google introduced its generative world model Genie 3, sparking discussions about its potential to transform game development. Some industry experts suggest AI could replace traditional game engines and developers, lowering barriers to entry and causing sharp declines in the stock prices of game development platforms such as Unity and Roblox.
Addressing these concerns, the CEO explained that the industry has misunderstood AI’s role. While it makes game creation more accessible, it simultaneously raises the bar for achieving commercial success. He emphasized that successfully integrating AI with complex systems, economic models, and social ecosystems requires deep expertise in game design and operations—an obstacle for inexperienced entrants.
For the full year of 2025, the company’s net profit increased 14% year-over-year to CNY33.8 billion, with revenues rising 7% to CNY112.6 billion (around USD16.1 billion).
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