Macquarie: Reiterates Tencent Holdings Limited "Outperform" rating, maintains target price of HKD 661

Macquarie released a research report stating that Tencent Holdings' WeChat ecosystem is at the forefront of proxying artificial intelligence applications, utilizing its integrated platform to meet the needs of consumers and businesses. At the same time, Tencent prioritizes allocating internal GPUs to higher ROI areas such as advertising and gaming, with cloud revenue also benefiting from increased corporate demand. Overall, the firm believes Tencent is the best artificial intelligence ecosystem company in China, thus reiterating its "Outperform" rating and maintaining the target price at HKD 661. Macquarie believes Tencent's differentiated focus lies in WeChat's unified infrastructure, driving seamless information flow across functions through features like mini-programs and small shops. Management emphasized Tencent's ability to establish connections throughout the ecosystem, providing a competitive advantage for deploying AI-driven solutions without needing to provide decentralized user permissions for each use case. Additionally, internal AI integration remains a priority. Despite ongoing geopolitical uncertainties, Tencent previously kept capital expenditures below a percentage of revenue. Management reiterated the priority of allocating internal GPUs and actively seeking further optimization methods for their respective inference costs