UBS anticipates that TENCENT (00700) will report an 11% year-on-year increase in first-quarter revenue, with adjusted profit expected to grow by 12% to RMB 69.2 billion. By business segment, the firm predicts domestic gaming revenue will rise by 13%, international gaming revenue by 16%, advertising revenue by 18%, and fintech and business services revenue by 10%. UBS forecasts a 12% growth in adjusted earnings per share for TENCENT in fiscal year 2026, reaffirming a "Buy" rating with a target price of HKD 780. The report highlighted market focus on TENCENT's AI strategy and margin outlook, particularly regarding the upcoming launch of its Hunyuan 3.0 large language model in mid-April. Management has committed to investing no less than RMB 18 billion in new AI products by fiscal 2026, but UBS believes concerns over profit pressure from AI investments may be overstated. The firm estimates that margin improvements and profit normalization could generate approximately RMB 25 billion in additional incremental profit, or a 9% increase, sufficient to offset rising AI-related expenses while maintaining stable net profit margins.