Tencent Holdings Ltd. reported a far better-than-projected 62% surge in earnings while rival Alibaba Group Holding Ltd.’s profit plunged, highlighting the growing divergence between China’s twin internet powerhouses during a rocky post-Covid recovery.

Alibaba’s net income tumbled 86% after an unexplained writedown for losses in its publicly traded holdings, which include companies from AI firm SenseTime Group Inc. to brick-and-mortar chain Sun Art Retail Group Ltd. That came on top of heightened spending to ward off up-and-coming competitors. US-held shares were down more than 7% at 10:15 a.m. in New York.

China’s two internet pioneers reported financial results on the same day — a rarity that put their contrasting fortunes into particularly stark relief. Both reported better-than-expected single-digit revenue growth, even as their profit performance diverged.

Investors are increasingly attuned to bottom line results now that the world’s No. 2 economy is emerging from Covid-era curbs and a sweeping crackdown on Big Tech. Tencent’s market valuation had reached $460 billion even before the latest results, while Alibaba had slid to about $205 billion.

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Tencent, the operator of China’s ubiquitous WeChat social media gargantuan, showed how its TikTok-style video accounts service is gaining traction against ByteDance Ltd. Users spent 80% more time on WeChat’s video accounts, a nod to efforts to wrest engagement from its social media rival. That helped drive a 26% rise in ad sales.

Twinned with cost cuts, growth in advertising and cloud services helped it reach the best gross margin since 2016 even as the topline plateaued. Shares in Prosus NV — a proxy for Tencent’s stock after trading hours — rose more than 3.7%.

Alibaba grew revenue slightly faster — 6.6% versus Tencent’s 6%. But its net income was far worse than anticipated and even on an adjusted basis, before interest, taxes, depreciation and amortization, earnings slid 4%.

Neither company — two of the best barometers for consumer health — offered investors strong reassurances about the plight of China’s economy, which has struggled post-pandemic. Consumers remain cautious during a property meltdown and persistent youth unemployment, while the economy is slipping deeper into deflation, reflecting anemic domestic demand.

Alibaba Chairman Joseph Tsai said there were early positive signs that consumers were willing to spend again, though the market needed to “wait and see” on the domestic economy’s recovery.

“Nothing incrementally positive came out for Alibaba, whereas companies like Sea Ltd. and Tencent both came out strong,” said John Choi at Daiwa Capital Markets.