AI TRENDS | Daiwa Cuts Tencent Target Price to HK$670, Raises 2026 AI Capex Forecast

Daiwa lowered its target price for Tencent Holdings (00700.HK) to HK$670 from HK$700 while maintaining a buy rating. According to Jin10, Daiwa said it expected Tencent to raise its anticipated AI capital expenditure, which would put pressure on its medium-term earnings. Daiwa also said growth in Tencent’s gaming business had slowed due to a high base, but it believed the company’s momentum in gaining market share remained intact. Daiwa cut its 2026 to 2028 earnings-per-share forecasts by 1% to 6% to reflect these factors. The report raised Daiwa’s forecast for Tencent’s 2026 AI capital expenditure to about 181 billion yuan from 108 billion yuan, citing a stronger commitment to AI investment and improved chip supply. Daiwa said higher depreciation would weigh on Tencent’s near- to medium-term earnings performance, but it also expected the spending to support faster expansion in cloud services and monetization of AI demand, which it said could begin to be released from the second half of 2026.