Tencent (OTC:TCEHY) and Apple (NASDAQ:AAPL) don’t initially look like competitors. Chinese tech giant Tencent owns a diverse portfolio of gaming, mobile messaging, cloud, payments, and streaming media services. Apple generates most of its revenue from high-end hardware devices.
However, the two companies’ ecosystems have started overlapping in recent years. Tencent’s mobile messaging app WeChat, which serves 1.16 billion monthly active users with over 300 million integrated Mini Programs, is pulling users away from Apple’s App Store in China. Tencent’s gaming, music, and streaming video businesses also compete against Apple’s expanding ecosystem of subscription-based services.
I personally own stakes in both Tencent and Apple, and I believe both companies remain great long-term investments. Tencent will continue to profit from the growth of China’s gaming, cloud, payments, and media streaming markets, while Apple will leverage its brand appeal to launch new hardware products and subscription services.
Over the past five years, Tencent’s stock rallied about 150% as Apple’s stock rose 130%. So will Tencent continue outperforming Apple over the next five years? Let’s dig deeper to find out.
How do Tencent and Apple make money?
Last quarter, Tencent generated 29% of its revenue from video games, 28% from its fintech and business services unit, and 19% from online ads. The rest came from other businesses and investments in a long list of domestic and overseas companies.
Tencent’s gaming portfolio includes hit games like