Daiwa said in a July 13 research note that Tencent Holdings is expected to lift its AI capital expenditure outlook, a move the broker believes will put pressure on the company’s medium-term earnings. The firm lowered its 2026 to 2028 earnings-per-share forecasts by 1% to 6% to reflect that impact.
The biggest revision was to AI spending. Daiwa raised its 2026 AI capex forecast for Tencent from RMB 108 billion to about RMB 181 billion, citing a stronger commitment to AI investment and improved chip supply. It said heavier depreciation would weigh on earnings in the near to medium term, though it could also support faster cloud business expansion and monetization of AI demand, which it expects may start to show from the second half of 2026.
Daiwa also noted that Tencent’s gaming business growth has slowed against a high comparison base, while its market share gains remain intact. The broker kept its “buy” rating on Tencent but cut its target price from HK$700 to HK$670.
Daiwa trims earnings outlook and target price
BlockBeats reported on July 13 that Daiwa said in a research note it expects Tencent Holdings to raise its AI capital expenditure outlook, a shift that would pressure the company’s medium-term earnings. The broker cut its 2026 to 2028 earnings-per-share forecasts by 1% to 6% to reflect that change.
2026 AI capex estimate lifted to about RMB 181 billion
Daiwa raised its 2026 AI capex forecast for Tencent from RMB 108 billion to about RMB 181 billion. It said the revision reflects the company’s stronger commitment to AI investment and an improvement in chip supply.
The note said higher depreciation would weigh on Tencent’s earnings in the near to medium term. At the same time, Daiwa expects the increased spending to support faster cloud business expansion and monetization of AI demand, with the benefits possibly starting to show in the second half of 2026.
Gaming growth slows on a high base, buy rating maintained
Daiwa also said Tencent’s gaming business growth has slowed because of a high comparison base, though its market share growth momentum remains intact. The firm maintained its buy rating on Tencent and lowered its target price from HK$700 to HK$670.
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