Simply Wall St
3 min read
Tencent Holdings (SEHK:700) is back in focus after recruiting former OpenAI scientist Yao Shunyu to lead its artificial intelligence efforts, as China’s tech community weighs how to close the AI gap with the US.
See our latest analysis for Tencent Holdings.
The latest AI hire comes as momentum in Tencent’s share price has cooled in the short term. The 30 day share price return is 1.58% and the 90 day share price return is a decline of 6.22%. In contrast, the 1 year total shareholder return of 66.76% and 3 year total shareholder return of 68.57% point to a stronger longer term recovery story that investors are still weighing against current expectations and valuation.
If Tencent’s AI push has caught your attention, this could be a good moment to look across high growth tech and AI stocks for other tech names reshaping how artificial intelligence reaches users.
With Tencent trading at HK$611 and sitting at a 31.54% intrinsic discount, plus a 23.12% gap to analyst targets, are you looking at an underappreciated AI pivot, or has the market already reflected future growth?
According to the widely followed narrative from kapirey, Tencent’s fair value of HK$813.65 sits well above the last close at HK$611. This puts a spotlight on how its AI and platform assets might translate into future cash generation.
• AI Significant Boost to Advertising Business: Leveraged Tencent Hunyuan，to facilitate tagging and categorisation of content and ad materials. Expanding Cloud Services Solutions: Tencent Hunyuan is accessible via APIs for functions such as coding, data analysis and customer service automation. Integration of AI in SaaS Products: Empowered Tencent Meeting and Tencent Docs for real-time meeting content interpretation and document creation. Enhancing Content Production Efficiency: GenAI increasingly facilitating the creation of highquality game contents, such as S+ level skin special effects for Honour of Kings. Yuanbao AI Assistant: can be used for document analysis and summarisation, and gen-AI search leveraging Tencent’s content ecosystem, including Weixin Video Accounts, Official Accounts, and TME.
Read the complete narrative.
Curious what earnings, revenue mix and margin profile could support that gap between price and fair value. The narrative leans on faster growth and richer profitability than many might expect. Want to see which assumptions carry the most weight in that HK$813.65 figure.
Result: Fair Value of HK$813.65 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this hinges on regulatory decisions and geopolitical tensions, which could reshape AI deployment, overseas growth ambitions, and even the discount investors are willing to pay.
Find out about the key risks to this Tencent Holdings narrative.
That 24.9% undervaluation call is based on a narrative DCF style view of future cash flows. If you look at where the market is actually pricing Tencent today on earnings, the picture is more mixed and a bit less generous.
Tencent trades on a P/E of 22.6x, which is higher than the Asian Interactive Media and Services industry at 20.5x and in line with its peer average of 22.6x. Our fair ratio for Tencent is 24.9x, so the market is already paying a premium but not all the way up to that level. For you, that raises a simple question: is this a sensible price for a quality name, or is there less margin for error if the AI story does not play out as strongly as hoped?
See what the numbers say about this price — find out in our valuation breakdown.
SEHK:700 P/E Ratio as at Jan 2026
If parts of this story do not sit right with you, or you want to stress test the numbers yourself, you can build a personalised thesis in minutes with Do it your way
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Tencent Holdings.
If Tencent has you thinking about where AI and digital trends go next, this is the moment to broaden your watchlist and spot opportunities others might skip.
Zero in on potential growth stories early by scanning these 3540 penny stocks with strong financials that combine smaller size with stronger financial footing.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 0700.HK.
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