Citi maintains Buy on Tencent stock, HK$695 target

On Monday, Citi analysts maintained a Buy rating on Tencent Holdings (HK:0700) (700:HK) (OTC: OTC:TCEHY) with a steadfast price target of HK$695.00. The endorsement for the $598 billion tech giant comes in light of Tencent’s introduction of QBot on its QQ Browser, a move that Citi views as a significant advancement in Tencent’s AI capabilities. According to InvestingPro data, five analysts have recently revised their earnings estimates upward for the upcoming period, reinforcing the positive outlook. This new-generation AI browser is expected to enhance user experience by integrating credible data sources and providing a range of AI-driven functions such as search, browsing, writing, learning, and office tasks.

Tencent’s QBot is seen as a potential game-changer for the company, adding to its suite of AI tools which includes Yuanbao and ima. The company’s strong financial position, with a healthy gross profit margin of 53.75% and revenue growth of 10.06%, provides solid backing for its AI initiatives. Analysts believe that QBot could become a mainstream entry point for users, capitalizing on the existing large monthly and daily active user base of the QQ Browser, which stood at 433 million and 97 million respectively as of April 2025. The seamless integration of AI functionalities is anticipated to encourage user adoption and transition to AI-powered interactions.

Citi’s continued positive outlook on Tencent is rooted in the company’s ability to leverage its substantial and resilient user base, as well as its social graph ecosystem, to further its AI offerings. The company’s stock has shown strong momentum, gaining over 26% in the past six months. For detailed analysis and additional insights, investors can access comprehensive research reports through InvestingPro, which currently indicates the stock is trading below its Fair Value. The firm’s analysts emphasize Tencent’s position as a robust AI application player, which is reflected in their reaffirmed price target and rating.

Tencent has not only been focusing on enhancing user experience but also on expanding the scope of its AI technology. With the launch of QBot, Tencent aims to meet various user needs through its dual model capabilities, Hunyuan + DeepSeek, which are expected to play a pivotal role in the platform’s AI ecosystem.

The launch of QBot signifies Tencent’s ongoing commitment to innovation in the AI space, positioning the tech giant at the forefront of AI application development. Citi’s analysts underscore the potential for QBot to transform how users interact with AI technology and to solidify Tencent’s leading role in the industry.

In other recent news, Tencent Holdings reported impressive fourth-quarter results, with total revenue reaching Rmb172 billion, marking an 11% year-over-year growth. This performance exceeded CLSA’s estimates by 3%, and the company’s adjusted net profit surged by 30% to Rmb55.3 billion, surpassing expectations by 7.8%. CLSA subsequently upgraded Tencent’s stock rating to High-Conviction Outperform, citing strong contributions from domestic games and online advertising. Jefferies also raised its price target for Tencent to HK$646.00, maintaining a Buy rating. The firm highlighted Tencent’s progress in product launches and a potential favorable outcome of a Citizen Petition that could extend exclusivity for a product until 2032. Both analyst firms expressed optimism about Tencent’s future, pointing to a promising game pipeline and potential market share gains in search and e-commerce advertising. Tencent’s strategic focus on artificial intelligence is also expected to be a key growth driver. These developments reflect growing confidence in Tencent’s ability to navigate a dynamic market environment.

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