Morgan Stanley: Tencent's Hong Kong Stock target price lowered by nearly 12% due to short-term drag on profit margins in the field of AI investment.

Morgan Stanley stated that Tencent is increasing its investment in basic models, Yuanshi, and other new artificial intelligence products and GPUs, and these early investments will put pressure on the company's profit margin in the short term. The target price for the company has been lowered from 735 Hong Kong dollars to 650 Hong Kong dollars. Analysts like Gary Yu pointed out in their report that Tencent's operating profit for 2026 and 2027 under non-International Financial Reporting Standards will be reduced by 6% to 7% to reflect higher AI-related investments; it is expected that Tencent's revenue will increase by 10.8% in 2026, with operating profit growth of 5% under non-International Financial Reporting Standards. Tencent is expected to invest 18 billion RMB in new AI products in 2025, which is expected to more than double in 2026; in the long run, Tencent's investment in the field of AI is expected to unleash new growth opportunities; they reiterated an overweight rating for the company.