According to a research report published by China Merchants Securities International, Tencent's second-quarter results slightly beat expectations, and domestic game and advertising business growth exceeded expectations. After excluding investment in new AI products, operating profit increased 19% year-on-year, and the profit quality of the core business was still improving. On the other hand, Tencent has identified four major AI strategies to support more aggressive capital spending. The bank pointed out that the profit release of AI empowers core businesses to support AI investment. It is optimistic about Tencent's AI products and ecological moat, and has renewed its “increase” rating. The target price was lowered from HK$632 to HK$620. The bank raised Tencent's capital expenditure forecast for 2026 and 27 to $215.7 billion and lowered the company's core net profit for 2026 to 28 by 5 to 9% due to rising depreciation expenses. It is expected that the core net profit growth rates for 2026 and 27 will be 2% and 3%, respectively. The bank believes that the increase in capital expenditure will put some financial pressure on Tencent in the short term, but it can be mitigated by increasing profits in core businesses, and AI investment has clear downside protection.

According to a research report published by China Merchants Securities International, Tencent's second-quarter results slightly beat expectations, and domestic game and advertising business growth exceeded expectations. After excluding investment in new AI products, operating profit increased 19% year-on-year, and the profit quality of the core business was still improving. On the other hand, Tencent has identified four major AI strategies to support more aggressive capital spending. The bank pointed out that the profit release of AI empowers core businesses to support AI investment. It is optimistic about Tencent's AI products and ecological moat, and has renewed its “increase” rating. The target price was lowered from HK$632 to HK$620. The bank raised Tencent's capital expenditure forecast for 2026 and 27 to $215.7 billion and lowered the company's core net profit for 2026 to 28 by 5 to 9% due to rising depreciation expenses. It is expected that the core net profit growth rates for 2026 and 27 will be 2% and 3%, respectively. The bank believes that the increase in capital expenditure will put some financial pressure on Tencent in the short term, but it can be mitigated by increasing profits in core businesses, and AI investment has clear downside protection.