Bank of China International: Maintaining Tencent Holdings (00700) “Buy” Rating Target Price of HK$655

The Zhitong Finance App learned that Bank of China International released a research report stating that the “buy” rating of Tencent Holdings (00700) and the target price of HK$655 will remain unchanged. Bank of China International believes that Tencent's core business focuses on games, benefiting from an evergreen gaming portfolio and rich gaming platforms, and will continue to be resilient in the next few quarters.

According to the report, Tencent has continued to increase investment in artificial intelligence in recent years, and the public is concerned that Tencent's capital and cash expenditure will reach 160 to 180 billion yuan in 2026 (depending on supply chain dynamics). It is widely believed that Tencent will maintain a steady pace of investment to maintain business flexibility.

The bank predicts that it is still too early to focus on capital expenditure levels after 2027. After 2027, Tencent will adopt a more moderate strategy and increase capital expenditure plans this year, unless C-side AI applications prove to generate large-scale revenue and a good profit model, or the core social ecosystem and main business are swayed by high-end AI competitors. The bank believes that Tencent is currently prioritizing computing power resources in the mixed-element model. “Xiaowei” will not focus on promoting projects in the near future due to potential computing power consumption, compliance factors, and lack of effective commercialization methods.