Yamato published a research report. It is expected that Tencent Holdings will raise its AI capital expenditure expectations, which will put pressure on medium-term profits. At the same time, the growth of the game business has slowed under a high base, but its market share growth momentum is still intact. The bank lowered the company's 2026-2028 earnings forecast per share by 1% to 6% to reflect the relevant impact. Daiwa drastically raised Tencent's 2026 AI capital expenditure forecast from 108 billion yuan to about 181 billion yuan to reflect the company's stronger commitment to AI investment and improvements in chip supply. Although higher depreciation will drag down its profit performance in the near to medium term, it is also expected to drive faster expansion of the cloud business and the monetization of AI demand, and is expected to be released from the second half of 2026. In terms of the game business, the bank lowered Tencent's game growth forecast for the second quarter of 2026 from 14% to 10%, including the domestic game growth forecast to 12% and the international game growth forecast to 9%, mainly due to the fact that many games confirmed a smoother turnover during the Lunar New Year period and faced a higher comparison base. Daiwa maintained Tencent's “buy” rating, and the target price was lowered from HK$700 to HK$670.

Yamato published a research report. It is expected that Tencent Holdings will raise its AI capital expenditure expectations, which will put pressure on medium-term profits. At the same time, the growth of the game business has slowed under a high base, but its market share growth momentum is still intact. The bank lowered the company's 2026-2028 earnings forecast per share by 1% to 6% to reflect the relevant impact. Daiwa drastically raised Tencent's 2026 AI capital expenditure forecast from 108 billion yuan to about 181 billion yuan to reflect the company's stronger commitment to AI investment and improvements in chip supply. Although higher depreciation will drag down its profit performance in the near to medium term, it is also expected to drive faster expansion of the cloud business and the monetization of AI demand, and is expected to be released from the second half of 2026. In terms of the game business, the bank lowered Tencent's game growth forecast for the second quarter of 2026 from 14% to 10%, including the domestic game growth forecast to 12% and the international game growth forecast to 9%, mainly due to the fact that many games confirmed a smoother turnover during the Lunar New Year period and faced a higher comparison base. Daiwa maintained Tencent's “buy” rating, and the target price was lowered from HK$700 to HK$670.