--- title: "Dai Hang: Daiwa: Tencent's quarterly results are stable, AI investment accelerates, reiterates \"Buy\" rating" type: "News" locale: "en" url: "https://longbridge.com/en/news/279883108.md" description: "Daiwa released a research report stating that Tencent's performance in the fourth quarter of 2025 is solid, with international gaming and cloud business performance exceeding market expectations, and gross margin rising to 56%. Despite increased AI investments and expenditures, Tencent's core businesses such as gaming, advertising, cloud, and fintech benefit from AI, supporting short-term profitability. The report forecasts a 4% upward adjustment in Tencent's earnings per share for the next two years, reiterating a \"Buy\" rating with a target price of HKD 725" datetime: "2026-03-20T03:24:32.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279883108.md) - [en](https://longbridge.com/en/news/279883108.md) - [zh-HK](https://longbridge.com/zh-HK/news/279883108.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/279883108.md) | [繁體中文](https://longbridge.com/zh-HK/news/279883108.md) # Dai Hang: Daiwa: Tencent's quarterly results are stable, AI investment accelerates, reiterates "Buy" rating Daiwa published a research report stating that Tencent (00700.HK) will have solid performance in the fourth quarter of 2025, with international gaming and cloud businesses becoming significant highlights, outperforming market expectations. The expansion of gross profit across business segments is another highlight, driving the overall gross profit margin of the group to 56%, reflecting improvements in the business mix and operating leverage, despite an increase in AI investments and expenditures during the period. The report indicated that Tencent's AI investments significantly increased in the fourth quarter of last year, with operating expenses and capital expenditures totaling RMB 20 billion, a quarterly increase of 51%. Importantly, AI has begun to strengthen Tencent's core businesses, including gaming, advertising, cloud, and fintech, by enhancing user engagement, monetization capabilities, and expanding gross profit, providing support for short-term profitability. In terms of agent-based artificial intelligence, Tencent's advantage lies in its ecosystem, which can leverage WeChat, mini-programs, payments, and enterprise workflows, with this differentiation relying less on the models themselves. Tencent's investment in new AI products (operating expenses) last year was RMB 18 billion, and it plans to double this amount this year, with funding coming from incremental operating profits and reduced share buybacks. The firm believes this move is a key measure to consolidate its position in the AI product competition, but it means short-term shareholder returns will drop to about 2.5% or below. In terms of gaming business, Tencent's performance in the fourth quarter of last year exceeded expectations, mainly driven by "PUBG Mobile" and "Naraka: Bladepoint" in international markets, while the domestic market remained stable supported by evergreen games and franchises like "Delta Force." The economic benefits of the cloud business are improving, benefiting from stronger AI demand, a more favorable pricing environment, and ongoing supply chain optimization, recording an adjusted operating profit of RMB 5 billion in 2025, compared to just breaking even in 2024. Due to the increase in gross profit margin, Daiwa raised its earnings per share forecast for Tencent for this year and next by 4%, reaffirming its "Buy" rating and maintaining a target price of HKD 725, equivalent to a projected price-to-earnings ratio of 20.1 times for 2026 ### Related Stocks - [TENCENT (00700.HK)](https://longbridge.com/en/quote/00700.HK.md) - [Tencent Holdings Limited (TCTZF.US)](https://longbridge.com/en/quote/TCTZF.US.md) - [Tencent Holdings Limited (TCEHY.US)](https://longbridge.com/en/quote/TCEHY.US.md) ## Related News & Research - [Pony AI Taps WeChat's Billion Users To Supercharge Robotaxi Bookings](https://longbridge.com/en/news/279027140.md) - [Morgan Stanley Keeps Their Buy Rating on Tencent Holdings (TCTZF)](https://longbridge.com/en/news/279892254.md) - [From AI Fabs to Fintech: Four New Tools for Fast Narratives](https://longbridge.com/en/news/279800895.md) - [2 Beaten-Down AI Stocks Investors Shouldn’t Dump Yet](https://longbridge.com/en/news/279827679.md) - [Jefferies' Goodman: 'Early' in the AI Disruption Story](https://longbridge.com/en/news/279393269.md)