Broker: China Galaxy International Securities (Hong Kong) Co., Limited
Date of Report: February 10, 2026
Excerpt from China Galaxy International Securities (Hong Kong) Co., Limited report.
Report Summary
- Tencent’s game revenue is expected to grow 15% year-on-year in 4Q25, led by popular titles like Delta Force and a strong game pipeline for FY26, including new releases such as Honor of Kings: World and NZ: Future.
- Online advertising revenue is projected to rise 21% year-on-year in 4Q25 and maintain strong growth in FY26, driven by AI-driven improvements in ad conversion and efficiency, while Tencent’s ad load remains below peers, leaving room for further growth.
- Tencent is accelerating AI-related investments in 2026, increasing capex to support cloud, fintech, and AI applications. The Chinese government’s approval of Nvidia’s H200 chips and intensifying competition among Chinese tech giants in AI are expected to drive further investment.
- Financially, Tencent is forecasted to deliver 14% total revenue growth and 15% adjusted net profit growth year-on-year in 4Q25, with gross profit margin expansion. The DCF-based target price is maintained at HK\$750, implying a 33.9% upside from the current price.
- Key risks to the outlook include margin pressure from AI investments, slower revenue growth due to macroeconomic factors, and the risk of lagging behind peers in AI technology.
- The report reiterates an “Add” rating, highlighting large growth potential across all Tencent business units empowered by AI over the next 3–5 years.
Above is an excerpt from a report by China Galaxy International Securities (Hong Kong) Co., Limited. Clients of China Galaxy International Securities (Hong Kong) Co., Limited can be the first to access the full report from the China Galaxy International Securities (Hong Kong) Co., Limited website: https://www.chinastock.com.hk
