Daiwa maintains a "Buy" rating on Tencent, expecting AI to drive growth in core businesses such as gaming

Daiwa published a research report stating that it recently held a non-deal roadshow with Tencent (00700.HK) and, after communicating with the management, believes that Tencent is prioritizing the use of GPU resources for internal model training and enhancing core business, which is expected to bring higher certainty in returns.

Daiwa believes that Tencent's adoption of AI to drive ecosystem integration can amplify the value of the WeChat core interface, empowering areas such as chat, search, video accounts, content summarization and interaction, and mini-program programming. It can also promote the development of the gaming business, reduce costs, and strengthen innovation in game content. It is expected that Tencent will focus on updating existing games and launching new evergreen games next year, expressing confidence in the growth of Tencent's gaming business.

Daiwa emphasized that Tencent is the preferred stock in the Chinese internet sector, reiterating a "Buy" rating with a target price of 750 yuan, corresponding to a projected price-to-earnings ratio of 20.6 times for 2026