Bank of America Securities: Expects Tencent Holdings' WeChat AI Agent to undergo full public testing as early as the fourth quarter, optimistic about the timeline of three major catalysts

Zhitong
2026.06.03 08:18

Bank of America Securities released a research report, maintaining a "Buy" rating for Tencent Holdings with a target price of HKD 780. The firm is optimistic about Tencent's AI revaluation path: it expects an upgrade of the mixed Yuan model in the next 3-6 months, accelerated capital expenditure and cloud revenue in 6-12 months, and a gradual rollout of WeChat AI Agent in 9-18 months, with a full public test as early as Q4 2026. The report believes Tencent's valuation is at a historical low, underestimating its AI potential and the resilience of its core business

According to the Zhitong Finance APP, Bank of America Securities has released a research report stating that Tencent Holdings (00700) is reportedly close to launching an embedded AI Agent for WeChat. Currently, it is testing a prototype of the AI-supported feature, with the compliance process expected to start as early as this month, initially launching to a small group of external users before gradually expanding, although the public launch date has not yet been confirmed. The target price is HKD 780. The rating is maintained at "Buy," with Tencent still being the preferred choice in its China internet sector.

The report indicates that the launch of the WeChat AI Agent should help with stock revaluation, shifting the narrative towards Tencent's ability to effectively implement AI applications, which could alleviate investors' excessive focus on the daily active users (DAU) of independent AI chat apps; the public launch of the WeChat AI Agent will require significant computing power, benefiting Tencent's capital expenditure expectations for 2026-2028, and is expected to incur higher Token costs, but Tencent's core business is well-positioned, with advertising and gaming still in a monetization phase.

The launch timeline also depends on mini-programs and Agent partners; last night, Meituan announced plans to connect its AI Agent with Tencent's AI Agent; the timeline still has considerable flexibility, and it is expected that the WeChat AI Agent will gradually expand through multiple rounds of Beta testing, with full public testing possibly occurring as early as the fourth quarter of 2026.

The report states that after the first quarter performance in 2026, discussions between the firm and management indicate that Tencent is adopting a more proactive strategy in laying out AI models, computing power, and applications. Currently, Tencent's stock price corresponds to an estimated price-to-earnings ratio of about 13 times for 2026, close to historical lows, suggesting that the market's definition of "AI beneficiary stocks" is too narrow and static, significantly underestimating Tencent's AI options and the resilience of its core business.

The firm continues to be optimistic about Tencent's clear revaluation path: launching more mixed Yuan model family upgrades in the next 3-6 months; accelerating capital expenditure and cloud business revenue in the next 6-12 months; and gradually launching the WeChat AI Agent in the next 9-18 months

Trillion-Dollar Compute Buildout Sets the Stage — SaaS Harvest Season Is Here!
Source: Zhitong The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.