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<Research>BNP Paribas: TENCENT WeChat AI Agents Hit Snags; Rating Outperform
Recommend 22 Positive 34 Negative 12 |
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TENCENT (00700.HK) is advancing plans to launch highly anticipated AI agents for WeChat, BNP Paribas mentioned in a research report citing media reports. TENCENT is testing a prototype of the agent and plans to initiate the compliance procedures required before public release as early as this month, as revealed by sources familiar with the matter. The product will then be tested among a small group of users before a phased rollout. However, the exact date for public release has yet to be confirmed. The report highlighted that the WeChat AI agents will face multiple challenges upon launch. The importance of a successful launch could lead to prolonged testing delaying a rollout. Meanwhile, affected by US restrictions and tight domestic supply, TENCENT is hitting impasse in securing sufficient computing power to support the launch. In addition, the rollout of the agents could entail enormous spending on computing resources, and it remains unclear whether TENCENT can generate enough revenue in the short term to cover these costs. Before the recent share price uptick, TENCENT has declined by about 25% YTD amid market concerns over AI. However, AI agents on WeChat represent a core opportunity for the group, and recent news indicating an imminent launch should reassure the market. The broker expected TENCENT's revenue growth to accelerate, while improving AI narratives could drive valuation re-rating upside. Against the backdrop of substantial share buybacks, the current share price is equivalent to around 10x 2027E PE. The broker maintained its Outperform rating on TENCENT with a TP of HKD750. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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