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<Research>Nomura Raises TENCENT TP to $775; Chip Woe May Hamper Cloud Development
Recommend 33 Positive 42 Negative 8 |
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TENCENT (00700.HK) delivered solid set of 3Q results, however, its management acknowledged during a conference call that current AI chip supply constraints prompted a downward revision of FY2025 capex guidance, expected to fall below the previously-guided "low teens percentage of FY2025 revenue", but still higher than FY2024's RMB77 billion, Nomura's research report indicated. The chip crunch will continue to immensely impact Tencent's cloud business, hampering its development, as computing power is one of the highest-demand services for enterprise users deploying large language models (LLMs), the broker said. However, management expected that its two most valuable AI assets, Yuanbao (AI chatbot) and Hunyuan (LLM), are immune from the supply shortage. Compared to peers like ByteDance and BABA-W (09988.HK), Tencent's investment in AI infrastructure and LLMs over the past few years may have been insufficient. The Buy rating was maintained on TENCENT, with the target price raised from HKD757 to HKD775. AASTOCKS Financial News Website: www.aastocks.com |
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