TENCENT(HK:00700) 美股IPO·2025-08-14 03:56Core Viewpoint - Goldman Sachs believes that Tencent is one of the Chinese internet companies that can benefit the most from AI applications, as evidenced by its strong Q2 performance and record gross margins [3][4]. Group 1: Financial Performance - Tencent achieved its fastest revenue growth in four years and record gross margins in Q2 [3]. - Revenue and earnings per share forecasts for Tencent from 2025 to 2027 have been raised by 1-6%, with the target price increased from HKD 658 to HKD 701 [3][4]. Group 2: AI Empowerment - AI technology is driving growth across Tencent's business lines, including gaming, advertising, fintech, cloud services, and e-commerce [3][5]. - The advertising and gaming sectors have both maintained over 20% year-on-year growth for two consecutive quarters, attributed to AI's impact [4][6]. Group 3: Advertising Business - Tencent's advertising business, particularly on video platforms, has significant growth potential, with expected revenue growth of 19% and 16% for the fiscal years 2025 and 2026, respectively [4][9]. - The advertising revenue from video accounts and search grew by 50% and 60% year-on-year, respectively, indicating a strong monetization trajectory [10]. Group 4: Gaming Business - Tencent's "platformization" strategy in gaming is reducing reliance on single blockbuster games, leading to more stable growth [6]. - Game revenue grew by 22% year-on-year in Q2, with value-added services achieving record high gross margins [6][8]. - Upcoming games like "Delta Action" and the mobile version of "Valorant" are expected to drive further revenue growth, with projected annual revenues of approximately RMB 90 billion and RMB 70 billion, respectively [7]. Group 5: Capital Expenditure - Despite facing chip supply constraints, Tencent's capital expenditure is expected to rise, with projections for 2025 and 2026 increased to RMB 900 billion and RMB 1,020 billion, respectively [5].