人工智能发展稳步推进助力未来增长 强劲核心资金支持人工智能；维持买入评级

Results AsiaChina Steady progress in AI developmentpowers future growth Valuation & Risks Leo Chiang, CFAResearch Analyst+852-220-36240 Strong core funds AI; buy maintained Tencent delivered on track 1Q results, with revenue and adjusted net profitincreasing 9% and 11% YoY, respectively. Notably, the company made significantinitial progress on new AI products, including its LLM "Hy3 preview" and AI agentsolutions such as WorkBuddy and CodeBuddy. These AI advancements have beeninstrumental in growing existing core businesses and driving rapid growth in tokenusage on Tencent Cloud. Core businesses sustained healthy momentum with GPMcontinuingits upward trend due to a favourable revenue mix.This solidperformance provides strong cash flow, enabling significant investments in AI andoffering practical use cases for future AI deployments. We broadly maintain ourFY26/27 financial forecasts, and our target price remains unchanged at HKD800.We remain confident that Tencent can establish a strong AI position by leveragingits established consumer and enterprise ecosystem. Potential catalysts includefuture LLM updates or further breakthroughs in agentic AI applications. Wereiterate our Buy rating. Hy3 preview: established as a leading reasoning model with strong adoption Hy3 preview is established as a leading reasoning model in China, demonstratingeffectiveness in real-world software engineering and productivity tasks. Currentlydeployed across 131 internal Tencent products, including Yuanbao, QQ, andWorkBuddy, it benefits from iterative improvement. User and developer receptionhas been strong, evidenced by its #1 ranking in OpenRouter token usage since April28th. The next iteration will focus on aggregating larger datasets and scalingreinforcement learning to strengthen contextual understanding, enhance agenticcapabilities (e.g., coding), and increase general intelligence, optimized through co-design with other Tencent product teams. Agentic AI: early lead, high adoption, and strategic platform integrationTencent demonstrates an early lead in Agentic AI deployment. WorkBuddy boasts high daily active users (DAU), while both CodeBuddy and WorkBuddy exhibitstrong organic growth and high retention rates among active and paying users.Tencent's comprehensive platform provides inherent advantages for hosting AIagents, facilitating user control through communication and browsing interfaces(Weixin, WeCom, QQ, Yuanbao, QQ Browser), and third-party applications. Userscan also select AI models based on cost and performance. Future plans includeenabling AI agents to access the Mini Programs ecosystem. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank doesand seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singlefactor in making their investment decision. 14 May 2026Software & ServicesTencent Online games: revenue lag, reacceleration expected Tencent's domestic online game revenue grew 6% YoY in 1Q26, slower than thegross receipts' teens percentage YoY growth. This disparity was primarily due to thetiming of the 2026 Spring Festival, which shifted a portion of revenue recognitionout of the current quarter. We anticipate revenue growth to reaccelerate insubsequent quarters, supported by (1) the recognition of strong deferred revenuerecorded in 1Q, and (2) contributions from the new hit title, "Roco Kingdom: World." Marketing services: AI-driven acceleration and enhanced closed-loopcapabilities Ad revenue accelerated to 20% YoY growth in 1Q26 (up from 17% YoY in 4Q25). Thisacceleration was driven by an upgraded AI-driven ad recommendation model andexpandedclosed-loop marketing capabilities within the Weixin ecosystem,resulting in improved ad performance and pricing. Ad spending increased acrossmost major industry categories, with notable growth from internet services, e-commerce, and games. We anticipate continuous enhancements in ad-tech andclosed-loop capabilities will sustain strong momentum in subsequent quarters. FinTech and Business Services: continued growth, 2H pick-up expected FinTech revenue growth was primarily driven by increased commercial paymentand wealth management services. Business Services revenue rose 20% YoY,attributed to higher demand for cloud services in both domestic and internationalmarkets. We anticipate cloud revenue could further accelerate in 2H26 as chipsupply becomes more readily available. 1Q26 key takeaways Online games nDomestic Gamesrevenue grew 6% YoY to RMB 45.4bn. Revenue growthlagged gross receipts due to a later Spring Festival shifting recognition to2H26. nEvergreens:Honor of Kings gross receipts hit a lifetime high.Peacekeeper Elite peak DAU reached 90mn, up 30% YoY grossreceipts, which was driven by a new mode and IP collaborations(F