---
title: "Morgan Stanley: Downgrades Tencent's target price by over 15%, increased AI investment is expected to weigh on short-term profits"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/295725724.md"
description: "Morgan Stanley lowered Tencent's target price by over 15% to HKD 550, maintaining an overweight rating. Due to increased upfront investments in AI, capital expenditures are expected to reach RMB 200 billion in 2026-2027. Operating profits for this year and next year have been revised down by 1.8% and 12.3%, respectively, putting short-term profits under pressure. However, the long-term fundamentals remain solid, with a strong moat in core business, and excess computing power can provide downside protection through monetization via Tencent Cloud"
datetime: "2026-08-13T00:42:07.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/295725724.md)
  - [en](https://longbridge.com/en/news/295725724.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/295725724.md)
---

# Morgan Stanley: Downgrades Tencent's target price by over 15%, increased AI investment is expected to weigh on short-term profits

Morgan Stanley stated that Tencent's solid core fundamentals are offset by investments in artificial intelligence, expecting the company's profits to remain flat from the second half of this year until 2027, and has lowered the target price by over 15% to HKD 550, maintaining an overweight rating. Analysts Gary Yu and others pointed out in the report that the capital expenditure forecast for Tencent for 2026-2027 has been raised to RMB 200 billion, while the operating profit under non-International Financial Reporting Standards for this year and next year has been lowered by 1.8% and 12.3%, respectively. Although increased AI investment may put pressure on short-term profits, Tencent has a solid foundation for creating long-term value. If necessary, excess AI infrastructure capacity can be monetized through Tencent Cloud, providing additional downside protection. Tencent's core business is one of the strongest in China's internet industry, benefiting from a lasting competitive moat, as well as the continuously enhancing AI support in the fields of WeChat, gaming, and advertising

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