Bank of China International: Focus on Tencent Holdings (00700) AI Investment Rating “Buy”

The Zhitong Finance App learned that Bank of China International released a research report stating that it will maintain the target price of Tencent Holdings (00700) of HK$655 and the “buy” rating. The bank generally kept Tencent's revenue forecast unchanged for the 2026-2028 fiscal year, and the overseas game revenue forecast was reduced by 1%. Taking AI investments into account, the net profit forecast was slightly lowered by 1-3%. The bank notes that Tencent has drastically increased AI investment since the beginning of 2026, and investors are paying more and more attention to Tencent's earnings per share forecast and return on AI investment capital (ROIC). The bank expects Tencent to increase AI investment significantly in 2026, but it will maintain a controlled pace of investment to maintain business flexibility.

Although it is still too early to predict the scale of capital expenditure in 2027 and beyond, the bank currently anticipates that investment growth will be more moderate unless the following conditions occur: 1) C-side AI monetization is verified on a large scale; 2) the core social side and 2C business face major disruptions from AI-driven competitors. The bank believes that Tencent will prioritize the allocation of high-quality computing resources to mixed-element platforms. Tencent's “Xiaowei” will not be the focus of attention in the near future due to its high consumption of computing resources and compliance barriers in the absence of effective digitization.