Bank of America Securities: TENCENT (00700) new AI agent product and WeChat function act as catalysts

Bank of America Securities has released a research report stating that it believes TENCENT (00700) is currently trading at a 16 times forecasted P/E ratio for 2026, which is not high. The firm maintains a "buy" rating and a target price of 780 Hong Kong dollars. Tencent's stock price rose by 7% yesterday (10th), and soared by 10% in the US pre-market trading, mainly driven by two developments. This includes the company launching several new self-developed artificial intelligence agents based on OpenClaw in the past few days; and a report by "The Information" yesterday stating that Tencent is actively developing new AI WeChat agent functions to connect users to its vast mini-program ecosystem, potentially through a new AI entry point within WeChat. The rapid adoption of AI chatbots and AI agents is expected to drive an increase in inference workload, leading to potential increases in capital expenditure and AI-related expenses for Tencent in the forecasted years of 2026 and 2027. The firm will focus on how management frames and quantifies midterm AI investments in the upcoming fourth quarter results for 2025.