UBS has released a research report stating that TENCENT's (00700) share price has declined approximately 13% year-to-date, underperforming the Hang Seng Tech Index and the Hang Seng Index over the same period. The bank believes this reflects investor concerns about potential industry disruption from AI and fears that TENCENT may be lagging in the AI competition. Nevertheless, UBS reiterated TENCENT as its top sector pick, maintaining a "Buy" rating with a target price of HK$780. The report indicated that most downside risks are already reflected in the stock price. UBS also noted positive recent developments in TENCENT's AI and gaming businesses, suggesting investors may be overlooking these factors. Regarding AI competition, while the market has focused on TENCENT's Yuanbao trailing in downloads and weekly active users during the Lunar New Year period, UBS emphasized that success in the AI field depends on integrating high-quality models, a strong user base, and extensive data. With WeChat boasting 1.4 billion users across diverse application scenarios—including social, commercial, and content—coupled with an active mini-program ecosystem, UBS believes TENCENT's unique advantages are difficult to replicate. The firm remains optimistic about TENCENT's strong potential in the field of AI agents.