Tencent's stronger AI investment commitment and improved chip supply lead Daiwa to raise its 2026 capital expenditure forecast for the internet company to 181 billion yuan from 108 billion yuan. Daiwa analysts caution that the higher expected capex could weigh on near- and medium-term earnings through higher depreciation. However, it should also enable faster cloud expansion and AI demand monetization from 2H, they say in a research note.

Tencent has made solid AI product deployment progress recently, but revenue from these productivity tools remains immaterial, with monetization still at an early stage and largely offset by rising training and inference costs, the analysts note. Daiwa lowers Tencent's target price to HK$670.00 from HK$700.00.

(END) Dow Jones Newswires