Goldman Sachs: Raises target price for Tencent to HKD 770, valuation still at a discount compared to global peers

According to the Zhitong Finance APP, Goldman Sachs released a research report stating that Tencent Holdings (00700) is empowered by AI across all its business lines, benefiting from its unique WeChat ecosystem and global gaming assets. The firm maintains a "Buy" rating on Tencent, raising the target price for the base scenario from HKD 701 to HKD 770, based on a comprehensive valuation method. The target price for Tencent in a "bull market" scenario is HKD 846, while in a "bear market" scenario, it is HKD 541.

Tencent's stock price has risen 56% this year, compared to the Hang Seng Tech Index's 44%. Despite renewed concerns among investors about U.S. tariffs and geopolitical risks, Goldman Sachs remains positive on Tencent. Although the stock has been repriced to a 19 times expected non-IFRS price-to-earnings ratio for 2026, its valuation still reflects a relative discount compared to global peers, and it holds relatively low monetizable assets, with multiple AI-driven monetization levers and a stable shareholder return policy.

The firm expects the market to focus on AI applications and capital expenditure outlook, as well as upgrades to foundational and multimodal AI model capabilities in Tencent's third-quarter performance. Goldman Sachs predicts Tencent's third-quarter revenue and earnings per share will increase by 13% and 18% year-on-year, driven by high-margin revenue sources and operational leverage. Goldman Sachs has raised its capital expenditure forecast for Tencent from this year to 2027 to RMB 350 billion and has also increased its cloud revenue growth forecast