HSBC: Tencent is expected to increase AI spending to boost long-term growth, lower target price while maintaining a buy rating.

HSBC analysts' research report stated that Tencent may increase its spending on AI to enhance its long-term growth potential. Tencent has lowered its capital expenditure for 2025 due to a shortage of AI chips, but this does not mean that its commitment to AI investment has decreased. "Continued AI investment will be used for talent recruitment, potential increased promotional expenses when launching new AI products, and higher related depreciation costs," they pointed out. Meanwhile, HSBC is optimistic about Tencent's stable fundamentals in the domestic gaming and advertising sectors. These analysts believe that due to the expected increase in research and development costs, Tencent's profit margin expansion pace may slow down. HSBC has lowered Tencent's target price from HK$780.00 to HK$770.00 while maintaining a buy rating.