Goldman Sachs: Tencent's valuation has bottomed out, maintaining a "Buy" rating with a target price of HKD 700
Goldman Sachs released a research report stating that Tencent Holdings' stock price has fallen by 27% year-to-date, mainly due to market concerns about its AI development progress and weak visibility of investment returns from consumer-side AI agents, leading to a valuation contraction. Based on the current price, the forecasted price-to-earnings ratio for 2026 is about 12 times. It believes that Tencent's valuation multiple has likely bottomed out, which may provide support for the stock price, maintaining a "Buy" rating with a target price of HKD 700. The bank pointed out that Tencent has made initial progress in its AI strategy recently, including a significant year-on-year increase in AI capital expenditure, its Hunyuan Hy3 model leading in token usage rankings in third-party API channels, and good development of enterprise AI businesses such as the intelligent agent Workbuddy. Goldman Sachs expects Tencent Cloud's growth to accelerate, with advertising revenue expected to maintain high teens to 20% growth, while the WeChat AI agent is expected to be piloted in the second half of the year
According to the Zhitong Finance APP, Goldman Sachs released a research report stating that Tencent Holdings (00700) has seen its stock price decline by 27% year-to-date, mainly due to market concerns about its AI development progress and weak visibility of investment returns from consumer-side AI agents, leading to a valuation contraction. Based on the current price, the forecasted price-to-earnings ratio for 2026 is about 12 times. Goldman Sachs believes that Tencent's valuation multiple has likely bottomed out, which may provide support for the stock price, maintaining a "Buy" rating with a target price of HKD 700.
The report pointed out that Tencent has recently made initial progress in its AI strategy, including a significant year-on-year increase in AI capital expenditures, the leading ranking of its mixed Yuan Hy3 model in Token usage on third-party API channels, and good development of enterprise AI businesses such as the intelligent agent Workbuddy. Goldman Sachs expects Tencent Cloud's growth to accelerate, with advertising revenue expected to maintain high teens to 20% growth, while the WeChat AI agent is expected to be piloted in the second half of the year
