Morgan Stanley said that Tencent's solid core fundamentals were offset by pre-investment in artificial intelligence. The company's profit is expected to remain flat from the second half of the year to 2027, lowering the company's target price by more than 15% to HK$550, maintaining an overrated rating. Analyst Gary Yu and others pointed out in the report that Tencent's 2026-2027 capital expenditure forecasts will all be raised to 200 billion yuan, and operating profit under non-IFRS will be reduced by 1.8% and 12.3%, respectively. Although increased investment in AI may put pressure on short-term profits, Tencent has a good foundation for creating long-term value. If needed, excess AI infrastructure capacity can be monetized through Tencent Cloud to provide additional downside protection. Tencent's core business is one of the strongest businesses in the Chinese Internet industry, thanks to enduring competitive moats and growing artificial intelligence support in WeChat, gaming, and advertising.

Morgan Stanley said that Tencent's solid core fundamentals were offset by pre-investment in artificial intelligence. The company's profit is expected to remain flat from the second half of the year to 2027, lowering the company's target price by more than 15% to HK$550, maintaining an overrated rating. Analyst Gary Yu and others pointed out in the report that Tencent's 2026-2027 capital expenditure forecasts will all be raised to 200 billion yuan, and operating profit under non-IFRS will be reduced by 1.8% and 12.3%, respectively. Although increased investment in AI may put pressure on short-term profits, Tencent has a good foundation for creating long-term value. If needed, excess AI infrastructure capacity can be monetized through Tencent Cloud to provide additional downside protection. Tencent's core business is one of the strongest businesses in the Chinese Internet industry, thanks to enduring competitive moats and growing artificial intelligence support in WeChat, gaming, and advertising.