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<Research>Citi Bullish on TENCENT as AI Strategy Gradually Materializes; Core Profit Continues to Grow
Recommend 17 Positive 29 Negative 16 |
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During the 1Q26 earnings conference call, TENCENT (00700.HK) management expressed satisfaction with the remarkable performance improvement of the Hunyuan 3.0 model, motivated by high token usage and close integration with the company's key internal products, Citi said in a report. Management indicated that integration with WeChat will be rolled out progressively, voicing confidence in gradually expanding Hunyuan 3.0 into a larger model in the future, leveraging practical use cases and feedback from its internal businesses and products. Beyond its AI business, Citi noted that TENCENT's core operations remain solid. Both domestic and foreign gaming businesses continued to bloom, with evergreen game titles notching new highs. Tencent Cloud and marketing services also delivered robust performance. Although GPUs are prioritized for internal demand, domestic GPU supply is expected to increase gradually in 2H26, which will become a key growth catalyst for the cloud business. After adjusting its forecasts, the broker lowered its TP from HKD783 to HKD763. It maintained a Buy rating and remained positive on the gradual execution of TENCENT's AI strategy, alongside sustainable growth in core profit. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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