JPMorgan noted in a research report that Tencent (700.HK) has demonstrated a clear path forward in its AI strategy, but the overall commercialization of returns still requires time.
Taking into account cost pressures from AI equipment depreciation and R&D investment, the bank lowered its adjusted earnings per share forecasts for Tencent in 2026 and 2027 by 2% and 10% respectively.
It also cut its target price by 9.4%, from HK$690 to HK$625, while maintaining an "Overweight" rating.
The report stated that Tencent prefers to first develop highly competitive proprietary models at a rapid pace, then prioritize monetization of enterprise productivity tools and cloud services, and only after the technology matures and costs become manageable will it push AI agents into national-level application scenarios such as WeChat.
JPMorgan believes this "enterprise first, consumer later" strategy can maximize Tencent's resource advantages, but in the short term it will inevitably front-load costs.
The bank noted that Tencent has extremely high-quality core businesses to support AI investment and development, and the long-term expansion potential of the WeChat ecosystem in the AI agent space is highly imaginative.
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