腾讯控股多线推进AI技术，投资规划符合市场预期

China (PRC) | InternetTencent Holdings Making Progress in AI on Multiple Fronts;Investment is Not New to Market Tencent has a number of new AI developments, such as the release ofHy3, testing of Weixin AI, and WorkBuddy gaining traction. In 2Q, weexpect advertising continued to gain market share, while domestic gamesdelivered faster growth vs overseas. Non-IFRS earnings growth is expectedto be slower vs revenue growth on AI spending. As highlighted in our report(link), investment in AI and step-up in capex are expected in 2026. MaintainBuy. Factoring in the latest trends, with solid progress in AI.For 2Q, we estimate total revenuegrowth of about 9.6% YoY (unchanged) to about RMB200bn. By segment, we estimateonline game revenue growth of about 8.6% YoY (vs consensus of 11% YoY and our priorestimate of 8.6% YoY), with faster growth for domestic games than overseas games. Fordomestic games, we expect solid performance by evergreen game titles. Our checks on iOSgrossing show in 2Q, Roco Kingdom World performed better than Honor of Kings World(link). For international games, we expect revenue deferral impact from the lapse of Supercellgrossing and normalization of acquired studios. We expect AI to drive user engagement andmonetization. For marketing services, we expect revenue growth of 18 % YoY (vs consensus of18% YoY) to RMB42.4bn, thanks to ad tech upgrades, and the strength of Video Accounts. Forfintech and business services (FBS), we estimate revenue growth of 9% YoY (vs consensus of9%), factoring in the latest consumer sentiment trends, and the expected acceleration in cloudrevenue YoY. We expect non-IFRS operating profit growth of 6% YoY (vs consensus of 9.3%YoY) to about RMB73bn, on AI investments. We estimate non-IFRS earnings to increase by 4%(vs consensus of 9.7% you, and largely unchanged from our prior estimate) to RMB65.5bn. Testing of Weixin AI kicked off in Jun.Tencent is conducting small-scale testing on WeixinAI across various scenarios in social & communication, information & search, productivity,entertainment/shopping, as well as tool generation. Weixin AI, called Xiao Wei, is: 1) located attop lefthand side of the main page; and 2) one of the features available inside messaging. Thecore model is WeLM, which was developed by the Weixin team. We view this as an importantstep for Tencent in Agent2Agent (A2A), and expect tofficial release in 4Q26. Please refer toreport (link) for details. WorkBuddy takes the lead in Workspace Agents market.The company highlighted third-party Analysys data on WorkBuddy's operating metrics in the segment (Mar-26). These include:1) the number of desktop monthly visits reaching 8.85m; 2) WorkBuddy is ahead of Trae(ByteDance), QClaw (Tencent) and Qoder Work (BABA). Continued inside... Zoey Zong * | Equity Analyst852 3743 8163 | zoey.zong@jefferies.com The Long View: Tencent Holdings Investment Thesis •Tencent's evolution from consumer to industry internet, while retainingits solid foundation in gaming and growing ad market share, paves theway for future success, in our view.•Expected solid revenue growth is backed by multiple drivers that lowerconcentration risk amid macro headwinds.•The social ecosystem of Tencent, with an emphasis on ROI andsignificant synergistic effects, gives it a key competitive edge over itspeers amid macro headwinds and intensified competition. Downside Scenario,HK$450, -4% Upside Scenario,HK$900, +92% Base Case,HK$750, +60% •Successful launch of strong-grossing newgames.•Faster-than-expected growth in online ads onmacro recovery.•Narrower-than-expected loss from cloudbusiness segment.•Upside PT of HK$900 based on a SOTPvaluation. •Unsuccessful launch of new games.•Slower-than-expected growth in online ads onmacro headwinds.•Aggressive subsidy campaign on paymentsand capex spending on Cloud.•Downside PT of HK$450 based on a SOTPvaluation. •We consider Tencent a global mobile gameleader,with a proven track record indeveloping successful games.•The success ofHoK, with record-high DAU andpositive feedback on new games, backed byportfolio strategy, should drive LT growth.•We view content as king in video advertising.•PT of HK$750 based on a SOTP valuation. Sustainability Matters Catalysts Top Material Issue(s): 1) Data security and customer privacy.Privacy protection and data securitymeasures are important for a technology company. The company needs to develop and usetechnology ethically and maintain the trust of partners, customers, counterparties.2) Employeeengagement, diversity, & inclusion.Talent is key in creating value for the company, and workforcediversity is important for innovation. The company should prioritize employee engagement and work-life balance, which can help in recruitment and retention of a diverse workforce. •Launch of high-grossing new games.•Stronger-than-expected outlook.•Faster-than-expected ad market share gains. Company target(s): 1)Pledged to reach carbon-neutrality across operations and supply c