Tencent Tells Investors Its $5 Billion Bond Mainly for AI Capex

Tencent Holdings Ltd. told fixed-income investors Monday that its planned bond offering of about $5 billion will help finance AI-related capital expenditures, people familiar with the matter said, as it doubles down on the sector.

The Chinese technology and gaming giant could price the deal as early as Tuesday, it said in a call with the investors, according to the people, who asked not to be identified because the discussions are private. The offering includes $1.5 billion to $2 billion across dollar tranches, and 20 billion yuan to 25 billion yuan ($3 billion to $3.7 billion) from offshore yuan notes, the people said.

The proceeds will be primarily for general corporate purposes, such as AI-related capital expenditure, with the bulk of such spending directed toward chip purchases, the people added, citing Tencent’s management.

Both global and Chinese tech companies are increasingly turning to capital markets to fund costly AI investments, even as investors start to scrutinize whether spending on data centers, chips and model development will generate adequate returns.

SoftBank Group Corp. recently raised $11.1 billion through one of the largest corporate junk-bond offerings on record, while Alibaba Group Holding Ltd. scooped up a record $10.2 billion via a follow-on offering. Chinese AI model maker Z.AI Co. garnered $9.6 billion through its IPO, placements and convertible bonds.

Tencent said in the investor call that it currently has no plans to issue shares or convertible bonds, added the people, citing the company.

Tencent didn’t respond to a request for comment.

Tencent is also ramping up its AI-related spending amid a push to catch up to rivals such as ByteDance Ltd. and Alibaba. The company hiked capital expenditures by 176% on AI projects and computing to 52.8 billion yuan in the June quarter, triggering a free-cash outflow of 13.8 billion yuan.

Tencent’s capital expenditure is likely to remain elevated through the remainder of 2026 and into 2027, suggesting annual spending of slightly more than 200 billion yuan based on second-quarter levels, the people said.