Tencent Holdings is scheduled to report second-quarter results on Wednesday. Here's what you need to know:

NET PROFIT FORECAST: The Chinese videogame and social-media company's quarterly net profit likely rose 5.2% to 58.51 billion yuan, equivalent to US$8.67 billion, according to the consensus estimate from a Visble Alpha poll of 29 analysts. That would end Tencent's streak of double-digit profit growth amid heavier AI investment.

REVENUE FORECAST: Revenue likely rose 9.9% to 202.80 billion yuan, with online gaming revenue likely posting 10% growth.

Tencent's shares have given up around 20% this year after falling 11% in the second quarter. A collection of concerns--from a lack of new blockbuster game and higher expenses related to artificial-intelligence investments--have weighed on investor sentiment. However, analysts think the current low valuation should be temporary, given its strong fundamentals.

WHAT TO WATCH:

-- Tencent officially released its Hy3 model in July that boasts enhanced model performance, greater stability and cost efficiency. Its average daily taken consumption has increased twenty-fold since its preview in April. CGS International analysts think that Tencent will likely increase its artificial-intelligence-related investment in the second half of the year to upgrade its Hy large model and cloud infrastructure, as well as AI agent services. Investors should pay attention to management comments on its subsequent AI investment plan.

-- There have been concerns about Tencent's weak gaming performance in the second quarter. However, Citi analysts think despite 2Q gaming grossing likely slowing down due to soft seasonality, deferred revenue recognition from previous quarters should support revenue for the period. "Short-term fluctuations shouldn't overshadow the fundamental strength of Tencent's diversified and globalizing gaming business," they said. Any updates on upcoming game launches are expected to be in focus.