Morgan Stanley: Tencent Holdings (00700.HK) increases AI investment, impacting short-term profits, lowers target price to HKD 550.

According to Zhituo Finance APP, Morgan Stanley has released a research report stating that the fundamentals of Tencent Holdings (00700.HK) core business are stable. However, due to increased investments in artificial intelligence, it is expected that profits will remain roughly flat in the second half of 2026 to 2027. As a result, the target price has been downgraded from HKD 650 to HKD 550, while maintaining an "Overweight" rating. The bank anticipates that Tencent's AI investments will accelerate in the second half of the year, mainly focusing on speeding up the development of the Hy (Mixed Element) model (Hy4 is set to be launched later this year), as well as expanding the productivity AI field through WorkBuddy and CodeBuddy.