UBS: Reaffirms Tencent (00700) as the industry's top choice, bullish on the potential of AI intelligent bodies.

UBS released a research report stating that TENCENT (00700) stock price has dropped by about 13% since the beginning of the year, underperforming the Hang Seng Tech Index and Hang Seng Index during the same period. This is believed to be due to investors' concerns about the potential industry disruption brought about by AI, and Tencent's potential lag in AI competition. UBS reiterated Tencent as its top pick in the industry, giving it a "buy" rating with a target price of 780 Hong Kong dollars. However, UBS also mentioned that most of the downside risks have already been reflected in the stock price performance, and pointed out that Tencent has shown positive developments in AI and gaming business recently, suggesting that investors may be overlooking these factors. In terms of AI competition, the market is concerned about Tencent's performance during the Chinese New Year period in terms of downloads and weekly active users for Tencent's virtual currency. But UBS pointed out that the key to success for companies in the AI field lies in their ability to integrate high-quality models, strong user base, and extensive data. With WeChat having 1.4 billion users and covering various applications such as social, commercial, and content, along with an active mini-program ecosystem, UBS believes that Tencent's unique advantages are difficult to replicate, and sees strong potential for Tencent in the AI intelligence field.