Bank of America Securities has issued a research report reiterating its "Buy" rating on Tencent Holdings (00700). While maintaining a target price of HK$780, the report notes that due to increased AI investments, the firm has lowered its non-IFRS net profit forecasts for 2026 and 2027 by 4% and 3%, respectively. The report stated that Tencent's fourth-quarter results helped de-risk full-year profit forecasts. It anticipates a clear path for valuation re-rating, including the launch of Hunyuan 3.0 and further large language model upgrades within the next six months, an acceleration in capital expenditure and cloud revenue over the next 6 to 12 months, and the introduction of WeChat AI agents within the next 9 to 18 months. The report indicated that Tencent's management revealed AI-related investments are expected to exceed RMB 36 billion in 2026, compared to RMB 18 billion in 2025. The increased AI investment may pressure the non-GAAP operating profit margin by a low single-digit percentage in 2026, but the impact is considered manageable.