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<Research>Nomura Cuts TENCENT's TP to HKD727, Trims NP Forecasts Due to Increased AI Investment
Recommend 11 Positive 15 Negative 10 |
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TENCENT (00700.HK) plans to further ramp up investment in new AI products this year, with the budget more than doubling to over RMB36 billion, equivalent to more than 4% of the market's revenue forecast for 2026, according to Nomura's research report. The company's cloud business strategy is also undergoing a shift. In Nomura's estimation, its cloud revenue growth will accelerate from 16% last year to 20% this year. Due to increased AI investment, Nomura expects TENCENT's non-GAAP operating profit margin for 2026 to decline by 0.4 ppts to 36.9%, resulting in a slowdown in corresponding operating profit growth to 9%, compared to a revenue growth forecast of 10%. Nomura has also trimmed its 2026-27 non-GAAP net profit forecasts for TENCENT by 3% and 1%, respectively, with net profit expected to grow by 8% during the period. TENCENT's rating remains Buy, but its target price has dropped from HKD775 to HKD727. AAStocks Financial News |
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