Tencent is substantially boosting its investment in artificial intelligence (AI), all the while upholding a stance of prudence and adaptability. BOC International projects that Tencent's capital expenditures will soar to a range of RMB 160-180 billion by 2026. Following 2027, it anticipates only a modest uptick in these expenditures, barring the occurrence of specific catalysts. Presently, Tencent is channeling its resources primarily into enhancing the high-end computing capabilities essential for its Hunyuan large-scale AI model. The 'Xiaowei' project, in contrast, does not currently occupy a central position in Tencent's strategic plans.

BOC International is confident that Tencent's fundamental business sectors, especially its gaming division, will reap the rewards of a robust and enduring game portfolio, coupled with a diverse array of product offerings. This robust foundation is expected to sustain the company's resilience in the quarters ahead. Consequently, BOC International reiterates its 'Buy' rating for Tencent, maintaining the target price at HKD 655 without alteration.