CLSA has released a research report stating that it expects Tencent Holdings (00700) to continue delivering steady revenue growth, although investments in artificial intelligence may weigh on profit margins by 2026. The firm estimates that Tencent's total revenue for the first quarter increased by 11% year-over-year to RMB 200 billion, with adjusted EBIT rising 10% year-over-year to RMB 76 billion. During the period, online gaming revenue is projected to have grown by 12.9% year-over-year, benefiting from strong performances of games such as "Honor of Kings," "Peacekeeper Elite," and "Delta Force." Advertising revenue rebounded to approximately 20% year-over-year growth, while growth in FinTech and Business Services accelerated. CLSA maintains a "High Conviction Outperform" rating on Tencent with a target price of HK$740.

The firm believes that Tencent, with its extensive WeChat ecosystem, is well-positioned to monetize AI applications, and its profitability is expected to show greater resilience compared to peers. The preview version of Hunyuan 3.0 was open-sourced in April, achieving a 40% improvement in inference efficiency over Hunyuan 2.0 and reducing input and output costs by more than 50%. New models and agent-based applications are anticipated to contribute to a re-rating of Tencent's stock.