JPMorgan released a research report stating that it expects TENCENT's (00700) total revenue for the fourth fiscal quarter to increase by 12% year-on-year to 193.7 billion yuan, aligning with market expectations. Adjusted net profit is projected to be 65.6 billion yuan, with the adjusted net profit margin rising by 2 percentage points to 34%; adjusted earnings per share are forecast at 7.13 yuan. Furthermore, the bank lowered its 2026 adjusted EPS forecast for the company by 1%, while maintaining a target price of HK$750 and an "Overweight" rating. The report suggests that Tencent's core engines—the WeChat ecosystem, advertising, and gaming businesses—continue to demonstrate resilience. It is also anticipated that the impact of artificial intelligence on the stock price trend will surpass the expectations for profit growth. Compared to its peers, Tencent's generative AI deployment remains in an earlier stage in terms of model demonstration and standalone application momentum, as management prioritizes reliability, compliance, and ecosystem fit over rapid scaling. This positioning means its stock price is not excessively inflated with an "AI premium," and if the company can demonstrate clear execution and product-market fit this year, it could create significant upside value. Regarding Tencent's upcoming Q4 2025 earnings report, the bank expects the overall financial trajectory to remain largely on track. The primary point of contention is whether macroeconomic weakness will impact cyclical businesses like advertising, and the report advises constructive investors to focus on AI-related signals that could influence both market sentiment and fundamentals.
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