Bank of America Securities: Maintains "Buy" rating on Tencent Holdings with a target price of HKD 780

Zhitong
2026.08.17 09:18

Bank of America Securities released a research report stating that it maintains a "Buy" rating on Tencent Holdings, with a target price of HKD 780, due to increased depreciation, lowering its non-IFRS net profit forecast for 2026 to 2028 by 2% to 6%. Bank of America Securities pointed out that Tencent's rapid catch-up in model capabilities and computing power accumulation could become a turning point similar to the "Battle of Midway," changing the long-term competitive landscape. The firm raised its capital expenditure forecast for Tencent for the fiscal years 2026 and 2027 to RMB 210 billion and RMB 260 billion, respectively, but believes that the quarterly cash pressure from computing power will peak in the second to third quarters. With increased computing power and the accelerated promotion of WorkBuddy, Tencent's cloud revenue is expected to further accelerate in the second half of this year and next year; due to active investments in artificial intelligence, depreciation is expected to significantly increase in the coming quarters; an accelerated iteration cycle is anticipated, with the release of Mix Yuan 4 likely within the next three months, further narrowing the capability gap with China's most advanced models; regarding WeChat's AI agent (Xiao Wei), it is expected to gradually expand to more users, with a full launch possible as early as the fourth quarter of this year

According to the Zhitong Finance APP, Bank of America Securities has released a research report maintaining a "Buy" rating for Tencent Holdings (00700) with a target price of HKD 780. Due to increased depreciation, it has lowered the non-International Financial Reporting Standards net profit forecast for 2026 to 2028 by 2% to 6%. Bank of America Securities pointed out that Tencent's rapid catch-up in model capabilities and computing power accumulation could become a turning point similar to the "Battle of Midway," changing the long-term competitive landscape.

The bank has raised its capital expenditure forecasts for Tencent for the fiscal years 2026 and 2027 to RMB 210 billion and RMB 260 billion, respectively, but believes that the quarterly cash pressure from computing power will peak in the second to third quarters. With increased computing power and accelerated promotion of WorkBuddy, Tencent's cloud revenue is expected to further accelerate in the second half of this year and next year; due to active investments in artificial intelligence, depreciation is expected to increase significantly in the coming quarters; the iteration cycle is expected to accelerate, with Hunyuan 4 likely to be launched within the next three months, further narrowing the capability gap with China's most advanced models; regarding WeChat's artificial intelligence agent (Xiao Wei), it is expected to gradually expand to more users, with a full launch possible as early as the fourth quarter of this year

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