Citigroup: Tencent's profit momentum is expected to be steady, but AI costs may limit upside potential.

Tencent's recent profit momentum seems stable, but continuously rising AI-related expenses may limit its upside potential. Citigroup analysts predict that Tencent's first quarter revenue will achieve steady growth, supported by seasonal game demand and stable franchise operations. However, due to AI-related costs, operating profits may remain flat. Market sentiment entering the second quarter may depend on market reactions to the Mixed Yuan 3.0 model and progress in embedding intelligent AI in WeChat. Citigroup maintains a buy rating on Tencent, citing its valuation and AI layout, while lowering its target price from HK$787 to HK$783.