BlockBeats News, July 13th. Daiwa published a research report stating that Tencent Holdings is expected to raise its AI capital expenditure outlook, which will put pressure on its mid-term profitability. Meanwhile, the growth of its gaming business has slowed down due to a high base, but its market share growth momentum remains strong.

The bank lowered the company's earnings per share forecast for 2026 to 2028 by 1% to 6% to reflect the related impact. Daiwa raised Tencent's 2026 AI capital expenditure forecast from the original 108 billion yuan to approximately 181 billion yuan to reflect the company's stronger commitment to AI investment and improvement in chip supply. Despite higher depreciation dragging down its near-to-mid-term earnings performance, this is also expected to accelerate the expansion of its cloud business and AI monetization, with potential release expected from the second half of 2026 onwards.

Daiwa maintains a "Buy" rating on Tencent with a target price lowered from HK$700 to HK$670.