JPMorgan Trims Tencent Price Target to HK$625 While Keeping Overweight Rating

Stock News10-16

JPMorgan has released a research report maintaining its "Overweight" rating on Tencent Holdings (00700), while lowering its price target from HK$625 to HK$690, according to a report.

The brokerage also cut its non-IFRS earnings per share forecasts for 2026 and 2027 by 2% and 10% respectively, mainly due to rising depreciation and related costs tied to artificial intelligence.

The bank noted that Tencent Holdings' artificial intelligence strategy now has a clear sequence, but the returns will take longer to materialize.

According to the report, Tencent first builds competitive in-house models through a rapid release cadence, then earns returns first from enterprise productivity tools and its cloud business, and only expands AI agents across WeChat at a nationwide application scale when quality and cost allow.

The bank believes this sequence plays to Tencent's strengths, but it will front-load costs.

JPMorgan said it will hold Tencent because of its high-quality core business that can support AI buildout, its relatively low valuation, and the potential of WeChat AI agents that exceeds the bank's forecasts.

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